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.

    Lessons from the gas price spike

    On April 1st this year, the average UK household will see its annual energy bills rise from £1,277 to around £2,000 a year, according to the Resolution Foundation. After 10 years of stagnant wages – this itself a result of the ongoing productivity growth slowdown, there’s a clamour for some kind of short term fix for a potential political crisis, made worse by a forthcoming tax rise. Even more ominously, an unfolding geopolitical crisis over a conflict between Russia and Ukraine may interact with this energy crisis in a potentially far-reaching way, as we shall see.


    UK gas and electricity spot prices (monthly rolling average of “day-ahead” prices). Data: OFGEM

    My first plot shows the scale of the crisis. This shows the wholesale, spot prices of gas and electricity since 2010. I don’t want to dwell here on the dysfunctional features of the UK’s retail energy market that have led to the failure of a number of suppliers, or to look at the short-term issues that have exacerbated a current supply squeeze. Instead, it’s worth looking at the longer term implications for the UK’s energy security of this episode of market disruption, and to try to understand how we have been led to this state by global changes in energy markets and UK policy decisions over decades.

    Natural gas matters existentially for the UK’s economy, because 40% of the UK’s demand for energy is met by gas, and without sufficient supplies of energy, a modern economy and society cannot function. The price of electricity is strongly coupled to the price of gas, because 34% of our electricity (in 2020) was generated in gas-fired power stations, compared to 15% from nuclear and 23% wind. But generating electricity only accounts for 29% of our total demand for gas. The biggest fraction – 37% – is used for heating our houses, with another 12% is directly burnt in industry, to make fertiliser, cement and in many other processes.

    To understand why the wholesale price of gas matters so much, we need to understand a couple of ways in which the UK’s energy landscape has changed in the last twenty years. The first – the UK’s own balance between production and consumption – is shown in the next plot. Since 2004, the UK has gone from being self-sufficient in gas to being a substantial importer. Production of North Sea gas – like North Sea oil – peaked in the early 2000s, and has since rapidly dropped off, as the gas fields most easily and cheaply exploited have been exhausted.


    Gas production and consumption in the UK. Data: Digest of UK Energy Statistics 2021, table 4.1.

    The second consideration is the nature of the international gas market. A few decades ago, natural gas was a commodity that was used close to where it was produced – it could not be traded globally. But since then an infrastructure has been developed to transport natural gas over long distances; a network of intercontinental pipelines have been built, so gas produced, for example, in Arctic Siberia can be transported to markets in Western Europe. And the technology for shipping liquified natural gas in bulk has been developed, allowing gas from the huge fields in Qatar and Australia, and from the USA’s shale gas industry, to be taken to terminals across the world. This means that a worldwide gas market has been developed, tending to equalise prices across the world. A liquified natural gas tanker can leave Qatar, the USA or Australia and choose to take its cargo to wherever the price it can fetch is highest.

    The combination of the UK’s dependency on gas imports means that the prices UK households and industry have to pay for energy reflect supply and demand on a global scale. My next plot shows how global demand has changed over the last couple of decades. The UK’s demand has held steady – the UK’s “dash for gas” represented an early energy transition from extensive use of coal to natural gas. This was a positive change that has reduced the UK’s emissions of greenhouse gases. Now other countries are following in the UK’s footsteps – again, a positive development for overall world greenhouse gas emissions, but putting huge upward pressure on gas supplies. This stresses that the UK is a minor player in world gas markets; its consumption accounts for about 2% of world demand.


    World gas consumption by continent, together with China and UK. Data: US Energy Information Administration

    Where is this gas coming from? The largest net exporter, as shown in my next plot, is Russia. There’s an ominous echo of the 1970’s and its linked energy, economic and political crises, as dominant energy suppliers realise that withholding energy exports can be a powerful weapon in geopolitical conflicts. As it happens, the UK’s gas imports come primarily from Norway, by pipeline, and Qatar, through LNG imports by ship. But this doesn’t mean that the UK won’t be affected if Russia chooses to exert pressure on Europe by throttling back gas exports. There’s a global market – if Russia cuts off supplies to Germany and Central Europe, Germany will seek to replace that by buying gas from Norway and on the world LNG market, and the prices the UK has to pay will rocket.


    Top gas net exporters (i.e. exports less imports).Data: US Energy Information Agency

    What should the UK do about this energy crisis?

    We can discount straight away the suggestion made by veteran Thatcherite and Eurosceptic MP, Sir John Redwood, that the UK should simply produce more gas of its own. The UK is a small-scale participant in a global market. Even doubling its gas production would make no impact on the global balance of supply and demand, so prices would be unaffected. It’s true that if the gas was produced by a government-owned organisation, the rent – the difference between the market price and cost of production – would be captured by the UK state rather than having to be handed over to the governments of major exporters like Qatar, Norway and Russia. But British Gas was privatised in 1986.

    The reason the UK ran down its production was that governments in the 1980’s made a conscious decision that energy should be left to the market, and the market said that it was cheaper to import gas than to produce it from the North Sea (and even more so than to develop a fracking industry in Sussex and the rural Pennines). One can’t help getting the impression that UK politicians like John Redwood are in revolt against the consequences of the national economic settlement that they themselves created.

    In fact, there is nothing fundamental the UK can do now apart from strengthen the social safety net for the poorest households, accepting the pressure to increase taxes this leads to. Less politically visible, but nonetheless important, is the pressure high gas costs will put on energy-using industries. The reality is that, as a net importer of energy, higher gas prices inevitably lead to a real loss of national income. Energy infrastructures take many years to build, so all we can do now is look back at the things the UK should have done a decade ago, and learn from those mistakes so that we are in a better position a decade on from now.

    What the UK should have done is to reduce the demand for gas through an aggressive pursuit of energy efficiency measures, and to increase the diversity of its energy sources by accelerating the development of other forms of (low-carbon) electricity generation. It failed on both fronts.

    In 2013, the Coalition government reduced spending on energy efficiency measures as part of a campaign to “cut the green crap”; the result was a precipitous drop in measures such as cavity wall insulation and loft insulation. In 2015, the zero-carbon homes standard was scrapped, with the result that new housing was built to lower standards of energy efficiency. Recall that 37% of the UK’s gas demand is for domestic heating, so the UK’s poor standards of home energy efficiency translate directly into increased demand – and, with the current high prices, higher bills for consumers. “Cutting the green crap” turned out to be a costly mistake.

    It is true that the UK has brought on-stream a significant amount of offshore wind capacity. However, too much of this capacity has been offset by the decline of the UK’s existing nuclear fleet, now approaching the end of its life. The UK government has committed to a programme of nuclear new build, but this programme has stalled. In 2013, I wrote that the nuclear new build programme was “too expensive, too late”, and everything that has happened since has born that diagnosis out.

    There’s a more general lesson to learn from the current gas price spike. For some decades, the fundamental underpinning of the UK’s energy policy is that the market should be left to find the cheapest way of delivering the energy the nation needs. In the last decade, the government has intervened extensively in that market to promote one policy objective or another. We’ve seen contracts for difference, capacity markets, renewable obligation certificates – the purity of a free market has long since been left behind. But there’s still an underlying assumption that someone will be running a spreadsheet to calculate a net present value for any new energy investment.

    Cost discipline does matter, but it’s important to recognise that these calculations, for investments that will be generating income for multiple decades, rest on projections of market conditions running many years in the future. But what this current episode should tell us is that the future course of energy markets is beset by what the economists call “Knightian uncertainty”. On the reliability of predictions of future energy prices, the lesson of the past, reinforced by what’s happening to gas prices now, is that no-one knows anything.

    Energy can’t be left to the market, because the future state of the market is unknowable – but the need for energy is an inescapable ingredient of a modern economy and society. For something that is so important, building resilience into the system may be more important than maximising some notional net present value whose calculation depends on guesses about the state of the world over decades. This is even more true when we factor in the externalities imposed by the effect of fossil fuels on climate change, whose cost and impact remains so uncertain. To be more positive, there are uncertainties on the upside – the reductions in cost that an aggressive programme of low carbon research, development and deployment-driven innovation could bring. Rather than relying entirely on market forces, we have to design a resilient zero carbon energy system and get on with building it out.

    Levelling up and R&D – the case for innovation deals

    The UK has a profound problem of regional disparities in productivity performance, with second tier cities that underperform compared to expectations based on their size, and deindustrialised towns and urban areas that have failed to find productive new economic roles. Productivity growth arises from innovation, taking that term in its widest sense, and formal research and development (R&D) is one underpinning of innovation, so it’s worth asking whether there is a link between geographical disparities in R&D intensity and regional economic underperformance.

    The distribution of research and development investment in the UK – especially in the public sector – is currently highly skewed to the prosperous Greater South-East. London, together with the two subregions containing Oxford and Cambridge, account for 46% of all public and charitable spending on R&D, with 21% of the UK’s population. We know that there are substantial spillovers from public and private R&D; econometric estimates suggests that a 10% rise in public R&D would raise private total factor productivity growth by 0.03 percentage points per annum, with an estimated return on public R&D of 20% per annum, so a correlation between regional R&D intensity and productivity might be expected. But does it matter where the R&D is done?

    R&D matters not just for the knowledge it generates and the inventions it produces, but in the capacity of firms to absorb new technology. It’s certainly possible to innovate without formal R&D – through the development of new business models, or through the acquisition of new equipment. But in the UK R&D still takes the largest share of firms’ innovation expenditure.

    One key justification for public support of R&D is that firms are unable to capture the whole benefit of the research they undertake – there are “spillover” benefits to other firms that are able to copy the innovations of the leaders. The geographical aspect of these spillovers is captured in the importance of clusters, recognised in economic writing since the time of Alfred Marshall. A successful regional cluster draws on a set of collective resources and knowledge, much of it tacit, that drives innovations in both products and processes.

    This set of collective resources has been called by US researchers Pisano & Shih the “industrial commons”. A successful industrial commons is rooted in large anchor companies & institutions, together with networks of supplying companies; it is characterized by both informal knowledge networks and formal institutions for R&D, training and skills. International examples include advanced manufacturing in Lombardy, Italy, ICT hardware in Hsinchu, Taiwan, and in the UK, biotechnology in Cambridge. A goal of regional economic policy should be to consciously attempt to rebuild the industrial commons in places where de-industrialisation has caused them to wither.

    Public R&D in the UK is carried out in universities, and increasingly, in specialist research institutes such as the Crick Institute in London. In comparison to other developed nations, one type of institution that is relatively lacking in the UK are translational and applied research institutes such as the Fraunhofer Institutes in Germany, IMEC in Belgium and the Industrial Technology Research Institute in Taiwan. Such institutes may focus more on industry engagement, process innovation, the wider diffusion of existing innovations, and in skills development than is possible in institutions more focused on basic research, and they can play an important role in nucleating and developing an innovation ecosystem of the kind that can anchor an industrial commons.

    Recent policy developments in the UK do give encouraging signs that some of these issues are being recognised. The UK’s Innovation Strategy, published in July 2021, stated that “we need to ensure more places in the UK host world-leading and globally connected innovation clusters, creating more jobs, growth and productivity in those areas”, while the October 2021 Comprehensive Spending Review announced a £5.2 billion increase in government R&D spending from FY 20/21 to 24/25, and made the important commitment that “the government will ensure 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”.

    Further details for how this increase will be delivered are expected in the imminent “Levelling Up” White Paper. One possibility, signalled in the Budget, is that the Catapult Network might play an important role. These centres represent a recent UK initiative to create the kind of translational and applied research institutes discussed above; it would be valuable to develop these further in a way which more explicitly recognizes their potential for regional development.

    The White Paper is being driven by the newly renamed Department of Levelling Up, Housing and Communities, but it will need support across the whole government, including not just the Department of Business, Energy and Industrial Strategy, but in other departments that have received substantial increases in their R&D budgets, especially Defence and Health and Social Care.

    For increased R&D spending to have a material effect on the UK’s regional productivity imbalances, it will be important to avoid two pitfalls. The first is to recognise the importance of scale. Too often previous attempts to boost innovation in the regions – for example, by the English Regional Development Agencies in the 2000’s – have been worthwhile in themselves, but implemented at a scale too small to make a material difference to regional economies.

    For example, the three Northern RDAs spent £157m on innovation in the three years of the 2004 spending review period – while government and HE R&D spending over the same period was £20.3 billion in total, of which £4 billion was in the North.

    To make a material impact on regional inequality of R&D spending, the resources deployed need to be at least an order of magnitude bigger; a crude calculation shows that to level up per capita public spending on R&D across the UK to the levels currently achieved in the Greater Southeast, additional annual spending of more than £4 billion would be needed. If the government is serious about devoting a significant share of the £5.2 billion R&D uplift to “levelling up”, the possibility now exists to make a real change, without jeopardising the existing excellence of R&D clusters in the Greater SE.

    The second is to ensure that spending priorities aren’t defined entirely “top-down”, from Whitehall or Swindon. To be effective in driving productivity growth, government spending on R&D must be deployed in a way that maximises its effect to “crowd in” private sector investment. This needs to be done in a way that works with the grain of local economies, building on the existing business base and complementing their existing assets and endowments. This will need local knowledge that it is unreasonable to expect national agencies to possess.

    The current geographical imbalances in R&D spending across the UK are of long-standing, and they won’t change without a significant change in the way funding is allocated. One way of doing this would be simply to devolve government R&D funding to cities, regions and nations to make their own decisions in the light of their knowledge of local economies.

    There are potential objections to this approach. Given the very patchy nature of devolution across the UK – and especially in England – places may lack institutions with the analytical capacity and the legitimacy to set priorities and make good funding decisions. There’s a further risk that a lack of coordination, between different regions and cities, and between cities and central government agencies, leads to duplication, unhelpful competition and lack of coherence with national policy and priorities.

    The idea of an “innovation deal” provides a way forward that answers these potential objections. In an innovation deal, cities and regions would develop a strong institution to implement an evidence-based local innovation strategy. Such an agency should be based on a coalition of private sector actors, local government (e.g. Mayoral Combined Authorities) and regional R&D assets, and would give central government and its agencies confidence that there was a trusted local partner that would take responsibility for implementing an innovation strategy and developing the region’s innovation ecosystem.

    These agencies would give a robust mechanism whereby central government and cities and regions could work together to co-create a set of priorities for those new investments, many of which would be focused on translational research and skills development, that would both be most effective for improving regional productivity, while at the same time supporting national innovation priorities, such as the 2050 Net Zero target and a drive to reduce inequalities in health outcomes across the nation.

    In Greater Manchester, a private sector led partnership of business, the Mayoral Combined Authority, and universities has come together to create “Innovation GM”, with an invitation to central government to work with them to make R&D led levelling-up of regional productivity a reality. Other cities and regions are engaged in similar initiatives, so there is now a chance to inject a new, place-led, dimension into innovation policy.

    The substantial uplift in R&D funding announced in the October 2021 budget, together with the commitment to spend more of this uplift outside the Greater Southeast, offers a once-in-a-generation chance to make a material difference to the UK’s persistent imbalances in R&D spending. Innovation deals with cities and regions offer mechanisms for maximising the impact of this spending uplift on regional productivity.

    When the promise of economic growth is not fulfilled

    It’s been widely reported that the government is considering lowering the earnings threshold at which people need to start paying back their student loans. Let’s leave aside, for a moment, the question of whether it’s good economic sense for some graduates, at relatively early stages of their careers, to be facing very high effective marginal tax rates, or indeed bigger questions of the fairness of the current split in tax burden between young and old. The fundamental reason this change is having to be considered reflects the fact that, contrary to the expectations of economists and the experience of the rest of the post-war period, average wages in the UK have been stagnant for a decade. Worsening terms for student loans represent just one example of the way we’re starting to see the unfulfilled promise of continued economic growth having depressing and unwelcome real-world effects.

    The key number in understanding the UK’s byzantine student finance system is the so-called RAB charge. When a student goes to university, the Government fronts up a fee to the university – currently £9250 a year (except in Wales) – and in some circumstances advances a loan for living expenses. In return, the student agrees to repay the loan in monthly instalments that depend on their income, with any unpaid portion of the loan being written off after 30 years. So, the fraction of the money the government doesn’t get back depends on the average level of wages, projected 30 years into the future. The less wages rise, the higher the fraction of the loan the government doesn’t recover. This fraction is known as the RAB charge, and is counted as a cost in the government’s accounts.

    When the current student loan scheme was introduced by the Coalition government in 2012, the RAB charge was expected to be about 30%. As the years went on, this number increased: for 2014, it was estimated at 45%, and by 2020, the RAB charge stood at 53% – the government expected less than half of the student loans advanced that year to be repaid. The total advanced by the government under the student loan scheme that year was £19.1 billion, so under the original assumptions of the scheme, the cost to the government would have been £5.7 billion. Instead, under the current assumptions, the cost is now more than £10 billion, largely due to the failure of the average wage growth anticipated in 2012 to materialise.

    Much of the discussion around the cost of the student finance system now revolves around the calculated return to individual degrees, by subject and institution. The creation of a large data-set linking subject studied to income achieved makes it possible to identify those degrees that provide the highest and lowest financial returns. This is fascinating and useful data, but there’s a danger of misinterpreting it, to suggest that the problem of the high cost to the government of the current HE funding system is the result of bad choices by individuals, and of universities offering “poor value” degrees. Instead, the fundamental issue is a collective one, of the economy’s failure over the last decade to deliver the progressively rising wages we had come to expect in the post-war period.

    It’s clear from the data that if an able individual wants to maximise their earning power, they should do a degree in economics rather than, say, music. But from that, it doesn’t follow that the nation would be more prosperous if every student studied economics. There is an issue about how to find the optimum distribution of subjects studied that matches the changing needs of an economy, but the first order determinant of the overall cost of the HE funding system is the average wage that the economy can sustain. The problem we have isn’t low value degrees, it’s a low value economy.

    The reason wages have been stagnant is straightforward – the regular, year-on-year, increases in productivity we had become accustomed to in the post-war period stopped around the time of the global financial crisis, and have not yet returned. Labour productivity measures the value added, on average, by an hour of work, so given a relatively constant split between the reward to capital and labour, we would expect labour productivity and average wages to track each other quite closely. My first plot – taken from the Treasury’s March 2020 Plan for Growth – shows that this relationship has indeed held quite closely in the UK over the last twenty years.

    The relationship between labour productivity (output per hour) and total labour compensation. From HM Treasury’s Build Back Better: our plan for growth, March 2021.

    As the Treasury said in the March 2021 Plan for Growth, “In the long run, productivity gains are the fundamental source of improvements in prosperity. Productivity is closely linked to incomes and living standards and supports employment. Improvements in productivity free up money to invest in jobs and support our ability to spend on public services.” The corollary of this is that, without productivity growth, we see stagnant living standards, and tighter fiscal conditions, leading to poorer public services. The story of the swelling RAB charge for the student finance system is just one example of the malignant effect of productivity stagnation on public finances.

    It’s conventional wisdom to look back to the 1970’s as the nadir of UK economic performance. But measured by productivity growth, the last decade has been much worse. From 1971 to 2006, labour productivity grew at a remarkably steady rate of about 2.3% a year – and this provided the material for sustained growth in living standards. But since 2010, trend growth has remained stubbornly low – at less than 0.4% a year.

    Labour productivity since 1970, with the latest prediction from the Office of Budget Responsibility. Sources: ONS, OBR Economic and Fiscal Outlook October 2021.

    What are the chances of this dismal trend being broken? The forecasts of the Office of Budgetary Responsibility are based on the expectation of a modest upturn in productivity. The OBR has been predicting a recovery in productivity growth every year since 2010, and this recovery has so far failed to materialise. I’ve written a lot about productivity before (see e.g. The UK’s top six productivity underperformers,
    Should economists have seen the productivity crisis coming? and Innovation, research and the UK’s productivity crisis), and I’ll surely return to the subject. In the meantime, I don’t understand why the OBR think it will be different this time, particularly given the additional headwinds the economy now faces.

    Many – if not most – of the big economic transactions made, both by individuals and by governments, amount to shifting saving and consumption backwards and forwards in time. Whether it’s individuals getting a mortgage on a house, or saving for a pension, or governments borrowing money now on the basis of the expectation of future tax income, we are making assumptions about how our future income, at a personal or national level, will grow. Governments don’t repay the national debt – they hope the economy will grow fast enough to keep the interest payments manageable. If our assumptions about income growth turn out to be over-optimistic the ramifications are likely to be unpleasant. The slow unravelling of the 2012 student finance settlement is just one example.

    UK science after the spending review

    On October 27th, the UK government set out its spending plans for the next three years, in a Comprehensive Spending Review. Here I look at what this implies for the research and development budget.

    The overall increase in the government’s R&D budget is real and substantial, though the £22 billion spending target has been postponed two years

    The headline result is that real, substantial increases in government R&D spending have been announced. The background to this is a promise made in the March 2020 budget that by 2024/25, government R&D spending would rise to £22 billion a year. Of course, after the pandemic, the UK’s fiscal situation is now much worse, so it isn’t surprising that the date for reaching this figure has been set back a couple of years.

    I wrote earlier about the suspicions in some policy circles that the government might attempt to game the figures to claim that the target had been reached – On the £22 billion target for UK government R&D
    I’m glad the government hasn’t done this, and instead has set out a path which does deliver real, and substantial increases in R&D spending.

    This is made clear in my first figure, which shows the trajectory of R&D spending since 2008. The Comprehensive spending review delivers an increase next year very much in line with increases in previous years, but the increase from 2022/23 to 2023/4 is very substantial – and in fact would put R&D spending on the trajectory that would be needed to achieve the £22 billion target by the original date of 24/25. I understand that the slower increases after that date are connected with some technicalities about the path of the UK’s contributions to the EU Horizon R&D programme, but more on that below.

    Comprehensive Spending Review commitments for total government spending on R&D, in current money, compared with historical actual spending. Sources: ONS, October 2021 HMT Red Book.

    Of course, these figures are uncorrected for inflation – and given that we’re currently seeing a rate of price increases higher than we’ve seen for some time, this is likely to make a big difference. I’ve attempted to show the effect of that in the next plot, which shows both the historical and projected R&D spending expressed in constant 2019 £s. I’ve made the correction using the Consumer Price Index, and used the OBR’s latest central prediction of future CPI inflation (of course, this may turn out to be optimistic) to deflate planned future R&D spending.

    This plot shows that R&D spending stagnated in the early 2010’s, with a gently increasing trend beginning in 2015. In real terms R&D spending only recovered beyond the previous 2009 peak in 2018. The increase from 2022/23 to 2023/4, even after the inflation correction, is significantly greater than anything we’ve seen in the last decade.

    If we look ahead to 2026/7, by when the £22 bn nominal total is planned to be reached, we can expect the real value of this sum to have been significantly eroded by inflation. On this, rather uncertain, projection, we project a 47% real increase on the 2009 previous peak.

    Comprehensive Spending Review commitments for total government spending on R&D, correct for inflation by CPI, compared with historical actual spending. Sources: ONS, October 2021 HMT Red Book, OBR Economic and Fiscal Outlook October 2021 (future CPI predictions).

    All areas of R&D spending see real increases, but there’s slight shift in balance to applied and department research

    Even though most attention falls on the R&D money the government spends in universities through research councils and research block grants, this actually forms a minority of the government’s total R&D spending. Other departments – notably the Department of Health and Social Care and the Ministry of Defence – have significant R&D budgets focused on more applied research connected to their core goals. The Department of Business, Energy and Industrial Strategy holds the overall budget for the UK’s main funding agency, UK Research and Innovation, but this also includes the innovation agency Innovate UK, which has a more business focus, and various pots of money directed at mission-orientated research, most notably the Industrial Strategy Challenge Fund.

    This is illustrated in my next plot, showing planned R&D spending in real terms. This shows a gentle but significant rise in what the government now calls the UKRI core research budget – mainstream research supported by the research councils and national academies, and the block grant distributed to universities by Research England and corresponding agencies in the devolved nations. The innovation agency Innovate UK is part of UKRI, but has been helpfully broken out in the figures; although this is a relatively small part of the overall picture, as we’ll see this will see substantial increases.

    What isn’t clear to me, at the moment, is how the R&D spending currently ascribed to the rest of BEIS will be allocated. I believe this includes funds currently distributed by UKRI, but not included in the “core research” line, which would include the Industrial Strategy Challenge Fund and the Strength in Places fund. It also includes various public/private collaborations like the Aerospace Technology Initiative. We await details of how these funds will be allocated; as the plot makes clear, this is a very substantial fraction of the total.

    The other uncertainty surrounds the cost of associating to the EU’s research programmes, particularly Horizon 2020. The UK’s withdrawal agreement with the EU agreed to associate with the EU’s R&D programmes, as widely supported by the UK’s scientific community, the UK government, and our partners in Europe. But the final agreement with the EU has not yet been signed by the Commission, who are linking its finalisation with all the other outstanding issues in dispute between the UK and the EU, notably around the Northern Ireland protocol.

    I understand that the commitment has been made that, if association with Horizon is stymied by these entirely unrelated problems, the full amount budgeted for the Horizon association fee will be made available to support R&D in other ways. It’s no secret that some in government would prefer this outcome, and the significant scale of the funds involved may tempt some in the scientific community to support such alternative arrangements, though it may be worth reflecting on the likely solidity of that commitment, as well as stressing the non-monetary value of the international collaborations that Horizon opens up.

    Breakdown of Comprehensive Spending Review commitments for government spending on R&D by department/category, corrected for inflation. Source: October 2021 HMT Red Book, OBR Economic and Fiscal Outlook October 2021 (future CPI predictions).

    The relative scale of the increases becomes more clear in my next plot, where I’ve plotted the real terms increase relative to the 2021/22 starting point. This emphasises that in relative terms, the big winners from the budget uplift are the other departments – dominated by the Ministry of Defense – and the innovation agency Innovate UK. The Department of Health and Social Care – which holds the budget of the National Institute for Health Research – also does well.

    The increase in the UKRI core research line is real, but significantly smaller. This does indicate a shift in emphasis to applied research and development, including R&D in support of other government priorities. However, one shouldn’t overstate this – there’s a lot of inertia in the system and the UKRI core research budget is still a very large proportion of the total. As a fraction of total government R&D, UKRI core research is planned to fall slightly from 32% of the total to a bit less than 30%.

    Increases in spending on R&D by department/category, corrected for inflation, relative to 2021/22 value (index=100). Source: October 2021 HMT Red Book, OBR Economic and Fiscal Outlook October 2021 (future CPI predictions).

    R&D spending, place, and the “levelling up” agenda

    Government R&D spending in the UK is currently highly concentrated in those parts of the country that are already most prosperous – the Greater South East, comprising London, the Southeast and East of England. In our NESTA paper “The Missing Four Billion, making R&D work for the whole UK”, Tom Forth and I documented this imbalance. For example, London, together with the two subregions containing Oxford and Cambridge, account for 46% of all public and charitable spending on R&D, with 21% of the UK’s population.

    A large part of the focus of the government’s “levelling up” agenda should be on the problem of transforming the economies of those parts of the country where productivity lags. Government spending on R&D should contribute to this, by supporting private sector innovation and skills. Currently, though, the UK’s R&D imbalances work in the opposite direction.

    The Comprehensive Spending Review makes a welcome recognition of this issue, stating in paragraph 3.7:

    “SR21 invests a record £20 billion by 2024-25 in Research and Development (R&D). The government will ensure 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, and will set out the plan for doing this in the forthcoming Levelling Up White Paper. The investment will build on the support provided throughout the UK via current programmes such as the Strength in Places Fund and the Catapult network.”

    This is an important commitment. It is the substantial real increase in R&D spending that gives us the opportunity, for the first time for many decades, to have the prospect of raising the R&D intensity of the UK’s economically lagging cities and regions without compromising the existing scientific excellence found in places like Oxford and Cambridge.

    How much money should be involved? The £20 billion R&D spend planned for 2024/25 represents a £5 billion increase from the current year; the business-as-usual split would suggest a bit more than half of that increase would go to the Greater South East. So, to ensure that an “increased share” goes outside the greater South East, we should be aiming for an uplift of order £3.5 – £4 billion. As the title of our paper suggests, that is a sum on a scale that could make a material difference.

    How should the money be spent in a way that delivers the outcomes we want – more productive regional economies, leading to more prosperous and flourishing communities? Paragraph 3.7 mentions two existing programmes – “Strength in Places” and the Catapult Centres. I think these are good programmes that can be built on, but they are not likely to be sufficient in scale by themselves, so more will be needed. Here are some concrete suggestions:

  • Double the size of the Strength in Places fund, and streamline the administrative processes surrounding it.
  • Expand the existing Catapult Network, creating new centres to support innovation in a wider range of industries and sectors across the country, stimulating more demand from industry across the whole country to participate in an expanded range of Innovate UK programmes.
  • Earmark the entire uplift in the budget of the National Institute of Health Research to be spent outside the Greater South East, with a single focus on reducing the shocking health inequalities between and within regions of the UK.
  • Ensure that the majority of R&D in support of the Net Zero goal takes place outside the Greater Southeast, supporting the development of productive new industries, for example in hydrogen for decarbonising heavy industry, new nuclear power, carbon capture and storage including direct air capture, development of zero-carbon fuels (e.g. e-fuels) for aviation and shipping, and large scale retrofitting of housing and adaption of new build to zero-carbon standards.
  • Use the uplift in R&D in support of defense and the security services – particularly in artificial intelligence and cybersecurity – to nucleate new digital clusters outside the Greater Southeast.
  • We await further details of the government’s proposals in the forthcoming Levelling Up White Paper. In my view, to achieve the government’s goals, we need to reconsider how decisions are made about R&D spending. Good decisions about the kinds of R&D support that work with the grain of existing local and regional economies need local knowledge of the kind that it is unreasonable to expect policy makers based centrally in Whitehall to have.

    Instead, I hope that the Levelling Up White Paper will create structures through which policy makers in central government and its agencies can work with more local and regional organisations in “Innovation Deals”, to co-create and research priorities that are both appropriate for specific places but also contribute in a joined-up way to national priorities. The local partners in these Innovation Deals should be credible, representative organisations bringing together the private sector, local government (e.g. Mayoral Combined Authorities in our big cities), and public sector R&D organisations, including universities.

    What should government R&D be for?

    By focusing too much on whether the government is going to hit or miss its target of £22 billion R&D spending, we forget that the purpose of R&D spending isn’t just to hit a numerical target, but to support some wider goals, to help solve some of the deeper problems that the country faces. I’d list those goals, not necessarily in order of importance, as follows.

  • Restoring productivity growth to the economy as a whole. Since the global financial crisis, productivity growth has dramatically slowed down, leading in turn to stagnant wages and living standards, and to a difficult fiscal situation that produces pressure on public services.
  • Raising the productivity of the UK’s economically lagging cities and regions. In particular, the UK’s second tier cities underperform relative to their counterparts in Europe, and their economies are not strong enough to drive the economically failing de-industrialised towns in their peripheries.
  • The innovation needed to make the wrenching economic transition to a net-zero energy economy by 2050 economically affordable and politically viable.
  • The health-related research that’s needed to underpin a health and social care system that is affordable, humane and sustainable for an ageing population, learning the lessons from a pandemic which is not likely to be the last one.
  • The research needed for our defence and security services to maintain a technological edge, to keep the nation secure in an increasingly hostile world.
  • I think the settlement of the science budget in the Comprehensive Spending Review takes us in the right direction. It’s a good settlement for the science community, but they aren’t its ultimate beneficiaries, and to achieve these goals we will need to do some things differently. In the words of Anthony Finkelstein, “We – ‘the science community’ – have done a deal. The sustained increase in R&D funding we have secured over several budgets is firmly based on a reciprocal promise: that we will deliver for UK prosperity.”

    Edited 8 November, to correct graphs 1 & 2, which originally had 2027 rather than 2026 for the new target date for £22 bn

    With the Commons Science Select Committee on “The role of technology, research and innovation in the COVID-19 recovery”

    The House of Commons Select Committee on Science and technology visited Manchester on 21st September, and I was asked to give oral evidence, with others, to its inquiry on “The role of technology, research and innovation in the COVID-19 recovery”. The full, verbatim, transcript is available here; here are a few highlights.

    My opening statement

    Chair: Perhaps I can start with a question to Professor Jones. Everybody around the world associates Manchester with technology over the ages, but if we look at the figures, the level of research and development spending investment, in the north-west at least, is below the national average. Give us a feeling for why that might be and whether that is inevitable and reflects things that we cannot help or what we should be doing about it, bearing in mind that we will be going into a bit more detail later in the session.

    Professor Jones: On the question of the concentration of research, this is something that has happened over quite a long time. The figure that I have in my mind is that 46% of all public and charitable R&D happens in London and the two regions that contain Oxford and Cambridge. There is no doubt—it is not just a question of Manchester—that the distribution of public research money across the country is very uneven.

    That has been a consequence partly of deliberate decisions—there has been a time when the idea has been, particularly when funding seemed tight, that it would be better to concentrate money in a few centres—but when it is given out competitively without regard for place, there is a natural tendency for concentration. Good people go to where existing facilities are. That allows you to write stronger bids and in that case there is a self-reinforcing element. That process is played out over quite a long time. It has got us to the situation of quite extreme imbalance.

    I have been talking there about public R&D. It is very important to think about private R&D as well. There is an interesting disparity between where the private sector invests its R&D money and where the public sector does. One finds places like Cambridge, which are remarkable places, where there is a lot of public sector R&D but then the private sector piles in with a great deal of money behind that. Those are great places that the country should be proud of and encourage. Particularly in the north-west, in common with the east midlands and west midlands, too, the private sector is investing quite a lot in R&D, but the public sector is not following those market signals and, in a sense, exploiting what in many ways are innovation economies that could be made much stronger by backing that up with more public funding.

    On excellence and places

    Graham Stringer: This is my final question on this section. The drift of great scientists to the golden triangle has been going on for a long time. Rutherford discovered the nucleus of the atom a quarter of a mile down the road in what is now a committee room, sadly. Rutherford left Manchester and went to the Cavendish afterwards. Do you think it is possible to stop that drift, because money also follows great scientists as well as institutions? The University of Manchester is a world-class university, but do you think it is possible to stop that drift and get University of Manchester, and some of the other great northern universities, up the pecking order to be in the same region as Imperial, Oxford and Cambridge?

    Professor Jones: Yes, there is scope to do that. You mentioned Rutherford. I used to teach in the Cavendish myself, so I have made the reverse journey.

    The point that is important, if we talk about excellence, is that people loosely say Cambridge is excellent. Cambridge is not excellent. Cambridge is a place that has lots of excellent people. The thing that defines excellence is people, and people will respond to facilities. If we create excellent facilities, we create an excellent environment, then excellent people from all over the world will want to come to those places.

    It is possible to be too deterministic about this. One can create the environment that will attract excellent people from all over the world. That is what we ought to aim to do if we want to spread out scientific excellence across the country.

    Graham Stringer: To simplify: the answer is for investment in absolutely world-class kit in universities away from the golden triangle?

    Professor Jones: It is world-class kit, but it is also the wider intellectual climate: excellent colleagues. People like to go where there are excellent colleagues, excellent students. That is the package that you need.

    On “levelling-up” and R&D spending

    Chair: As you say, clearly it would not be a step towards achieving the status of a science superpower if we were reducing core budget, so the opportunity to have a greater quantity of regional investment comes from an increase in the budget. Is it fair to infer logically from that that, of the increase, you would expect a higher proportion to be regionally distributed than the current snapshot of the budget?

    Professor Jones: Yes, absolutely. If we take the Government at their word about saying that there are going to be genuine increases in R&D, this does give us a unique opportunity because we have had quite flat research budgets for a couple of decades. Up to now we have always been faced with that problem: do you really want to take money away from the excellence of Oxford and Cambridge to rebalance? That is a difficult issue because, as I said in my opening remarks, Cambridge is a fantastic asset to the UK’s economy. But if we do have this opportunity to see rising budgets, if we are going from £14.9 billion to £22 billion—that is £7 billion of rise that has been pencilled in—it would be very disappointing if a reasonable fraction of that was not ring-fenced to start to address these imbalances, specifically with the aim of boosting the economy of those places with productivity that is too low needs to be raised.

    I think that tying it very directly to the Government’s goals of levelling up, increasing the productivity of economically lagging regions as well as their other very important goals of net zero, would be entirely reasonable.

    Chair: That is literally and specifically what you are describing, is it not—levelling up, in the sense that you have said you do not want to take down the budgets of existing institutions, you want to increase the others? That is levelling up.

    Professor Jones: Indeed.

    On the £22 billion target for UK government R&D

    As the pandemic moves to a new phase, it’s natural to assume that the Prime Minister would want to make progress on the other agendas that he might hope would define his tenure. Prominent in these has been his emphasis on the need to restore the UK’s place as a “Science Superpower” – for example, in his 15 July speech he said: “We are turning this country into a science superpower, doubling public investment in R and D to £22 billion and we want to use that lead to trigger more private sector investment and to level up across the country”, a theme he’d set out in detail in a 21 June article in the Daily Telegraph. The theme of boosting science and innovation is also crucial to the government’s other key priorities, “levelling up” by reducing the gross geographical disparities in economic performance and health outcomes across the UK, delivering on the 2050 “Net Zero” target, and securing a strategic advantage in defence and security through science and technology in an increasingly uncertain world.

    And yet, the public finances are in disarray following the huge increase in borrowing needed to get through the pandemic, the economy has suffered serious and lasting damage, and the talk is of a very tight spending settlement in the upcoming comprehensive spending review, given the need for further spending in the NHS and education systems to start to repair ongoing costs and the lasting aftermath of the pandemic. How robust will the Prime Minister’s commitment to science and innovation be in the face of many other pressing demands on public spending, and a Treasury seeking to bring the public finances back towards more normal levels of borrowing? The government is committed to two R&D numbers – a long term target, of increasing the total R&D intensity – public and private – of the UK economy to 2.4% by 2027. Another shorter term promise – of increasing government spending on research and development to £22 billion by 2024 – was introduced in the 2020 budget, and has recently been reasserted by the Prime Minister – though without a date attached.

    Some people might worry that the government could seek to resolve this tension by creative accounting, finding a way to argue that the letter of the commitments has been met, while failing to fulfil their spirit. It would be possible to bend the figures to do this, but this would be a bad idea that would put in jeopardy the government’s larger stated intentions. In particular, anything that involves a reclassification of existing expenditure rather than an overall increase, will do nothing to help the overall goal of making the UK’s economy more R&D intensive, and achieving the overall 2.4% R&D intensity target.

    To begin with, let’s look at the current situation. A breakdown of government spending in real terms shows that we have seen real increases, although it will not have felt that way to university-based scientists depending on research council and block grant funding. The increase the plot shows on the introduction of UKRI partly reflects an accounting artefact, by which spending in InnovateUK has been shifted out of the BEIS department budget into UKRI, but in addition to this there was a genuine uplift through programmes such as the “Industrial Strategy Challenge Fund”. These figures also include a notional sum for the UK’s contribution to the EU research programmes. In the future, assuming the question of the UK’s association with the Horizon programme is finally resolved satisfactorily, contributions to the EU research programmes will continue to be included in total R&D investment, as they should be, in my opinion. The uplift we’ve seen in the current year includes a contribution for EU programmes, as well as some substantial increases in R&D funding by government departments, especially the Ministry of Defence (overall departmental spending outside UKRI is dominated by the MoD and the Department of Health and Social Care).

    Total government spending on R&D from 2008 to 2019 as recorded by ONS, in real terms. 2021 is announced commitment. UKRI figure excludes Research England, but includes InnovateUK funding, previously recorded as department spending in BEIS (here included in “rest of government”). Research England is included in “HE research block grants”, which also includes university research funding from Devolved Administrations and, pre-2018, HEFCE. Data: Research and development expenditure by the UK government: 2019. ONS April 2021

    To summarise, it is true to say that government spending is higher now in real terms than it has been for more than a decade. But this still doesn’t look like a trajectory heading towards a doubling, and £22 billion looks a long way away.

    Of course, these are figures that are corrected for inflation; we will see a more flattering picture if we neglect this. And there might be some flexibility over the timescale for achieving the £22 billion target. My next plot shows the overall trajectory of government spending on R&D, in current money, without an inflation correction. The red line indicates the path required to achieve the £22 billion by the original date, 2024. This would require a substantial increase in the rate of the growth we have seen in recent years. But one might argue that the pandemic has forced a slippage of the timescale, which might be aligned with the 2027 target for achieving the overall 2.4% of GDP R&D intensity target. This does look achievable with current rate of nominal growth – and of course the pulse of inflation we’re likely to see now will make achieving £22 billion even easier (albeit at the cost of less real research output).

    Total government spending on R&D from 2008 to 2019 as recorded by ONS, in current money (non-inflation corrected) terms. 2021 is announced commitment. Data: Research and development expenditure by the UK government: 2019. ONS April 2021

    But there is another possibility for modifying the figures that may well have occurred to someone on Horse Guards Road. That would be to include the cost of R&D tax credits. These are subsidies offered by the government for research carried out in business, that according to circumstances can be taken as a reduction in corporation tax liability or a direct cash payment from government (the latter being particularly important for early stage start-ups that aren’t yet generating a profit). This, then, is another cost incurred by the government related to R&D, representing not direct R&D spending, but lost tax income and outgoings. It’s perhaps not widely enough appreciated how much more generous this scheme has become over the last decade, and there is a separate discussion to be had about how effective these schemes are, and the value for money of this very substantial cost to government.

    My next plot shows the effect of adding on the cost of R&D tax credits to direct government spending on R&D. The effect is really substantial – and would seem to put the £22 billion target within reach without the government having to spend any more money on R and D.

    Government spending on R&D from 2008 to 2019, as above, together with the cost of R&D tax credits (includes an HMRC estimate for total cost in 2019). The estimate for 2021 combines the committed figure for government R&D with the assumption that the cost of R&D tax credit remains the same in real terms as its 2019 value. All values corrected for inflation and expressed in 2019 £s. Uncorrected for the mismatch between fiscal years, by which R&D tax credit data is collected, and calendar years, for R&D spending.

    We can make the situation look even better by not accounting for inflation. This is illustrated in the next figure.

    Government spending on R&D from 2008 to 2019, as above, together with the cost of R&D tax credits (includes an HMRC estimate for total cost in 2019). The estimate for 2021 combines the committed figure for government R&D with the assumption that the cost of R&D tax credit remains the same in real terms as its 2019 value. All values in nominal current cash terms (uncorrected for inflation). Uncorrected for the mismatch between fiscal years, by which R&D tax credit data is collected, and calendar years for R&D spending.

    This not only gets us very close to £22 billion spending ahead of target, but also might allow one to argue that the Prime Minister’s claim of doubling government investment in R&D had been fulfilled, taking the timescale to be a decade of Conservative-led governments.

    What would be wrong with this? It would actually lock in a real terms erosion of spending on R&D, and would not help deliver the more enduring target, of raising the R&D intensity of the UK economy to 2.4% of GDP by 2027, most recently reasserted in the HM Treasury document “Build back better: Our Plan for Growth”. This target is for combined business and public sector funding – but redefining government R&D spending to include the government’s subsidy of R&D in business simply moves spending from one heading to another, without increasing its total. This would stretch to breaking to breaking point the larger claim, that the government is “turning this country into a science superpower”.

    Currently, while the UK’s science base has many strengths, it is too small for an economy of the size of the UK. If we measure the R&D intensity of the economy in terms of total investment – public and private – as a proportion of GDP, the UK is a long way behind the leaders, as my next plot shows. By R&D intensity, the UK is not a leader, or even an average performer, but in the third rank, between Italy and Czechia. The UK’s science base is a potential source of economic and strategic advantage, but it is currently too small.


    R&D intensity of selected nations by sector of performance, 2018. Data: Eurostat.

    This is widely recognised by policy makers, and is the logic behind the 2.4% R&D intensity target that was in the Conservative manifesto, and has since been frequently reasserted, for example in the Treasury’s “Plan for Growth”. In one sense, this is still not a very demanding target – assuming (unrealistically) that the R&D intensity of other countries remains the same, far from elevating the UK to be one of the leaders, it would leave it just behind Belgium.

    How much would the UK’s R&D spending need to increase to meet the 2.4% R&D intensity target? This, of course, depends on what happens to the denominator – GDP – in the meantime. Based on the OBR’s March estimates, we might expect GDP in 2027 to be around £2.4 trillion, up from £2.22 trillion in 2019, before the effects of the pandemic (both in 2019 £s). So to meet the target, total R&D spending – public and private – would need to be £58 billion.

    This compares to total R&D spending in 2019 of £38.5 billion, split almost exactly 1/3:2/3 between the public and private sectors (this figure includes expenditure associated with the R&D tax credits, but this appears here on the private sector side). So to achieve the 2.4% target, there needs to be a 50% real terms increase in both public and private sector R&D relative to 2019. If the same split between public and private is maintained, we’d need £19.4 billion public and £38.8 billion business R&D.

    There are two points to make about this. Firstly, we note that the estimate for the required public R&D is actually lower than the £22 billion government promise. This reflects the fact that the 2.4% target is less demanding than it used to be, since we now think we’ll be poorer in 2027 than we expected in 2019. However, remember that this is a figure in 2019 £s – so in real terms inflation will push up the nominal value. In fact, a very rough estimate based on the OBR’s inflation projections suggest that £22 billion nominal by 2027 as the government’s investment in R&D could be about right. On the other hand, OBR’s March 2021 forecast was quite pessimistic compared to other forecasters. If GDP turns out to recover more fully from the pandemic than the OBR thought, then R&D spending will need to be higher to meet the target – but this will be easier to fund given a larger economy.

    Secondly, note that this split between public and private sector is based on where the research is carried out, not who funds it. So the subsidy provided by the government in the form of R&D tax credits appears on the private sector side of the ledger. Unless the split between public and private dramatically changes over the next few years, then the £22 billion the government needs to put in can’t include the cost of R&D tax credits.

    Targets are important, but they are a means to an end. The Plan for Growth identifies “Innovation” as one of three pillars of growth. A return to economic growth, after a decade of stagnation of productivity growth and living standards, capped by a devastating pandemic, is crucial in itself. But innovation also directly underpins the government’s three main priorities.

    The first of these is the transition to net zero. This requires a wrenching change of the whole material base of our economy; it needs innovation to drive costs down – and to make sure that it is the UK’s economy and the UK’s communities that benefit from the new economic opportunities that this transition will bring.

    The second is “levelling up”, which, to be more than a slogan, should involve a sustained attempt to increase the productivity of the UK’s lagging cities and regions through increasing innovation and skills. This won’t be possible without correcting the imbalance in government R&D investment between the prosperous Greater Southeast and the lagging rest of the country. We shouldn’t put at risk the outstanding innovation economies we do have in places like Cambridge, so this needs to involve new money at a scale that will make a material difference.

    Finally, we need to rethink the UK’s position in the world. Part of this is about making sure the UK remains an attractive destination for inward investment by companies at the global technological frontier, and that the UK’s industries can produce internationally competitive products and services for export. But the world has also got more dangerous, and the modernisation of the UK’s armed forces and security agencies needs to be underpinned by R&D.

    The government will not be able to achieve these goals without a real increase in R&D spending. That does not mean, however, that we should just do more of the same. We need more emphasis on the “development” half of R&D, we need to coordinate the strategic research goals of the government better across different departments, we need to support the development of internationally competitive R&D clusters outside the southeast, all the while sustaining and growing our outstanding discovery science.

    So, could the government game its £22 billion R&D promise, by reclassifying the cost of the R&D tax credit as government investment in R&D and ignoring the effect of inflation? Yes, it could.

    Should it? No, it should not. To do so would put the 2.4% R&D intensity target out of reach. It would seriously undercut the government’s main priorities – net zero, “levelling up” – and keeping the UK secure in a dangerous world. And it would put paid to any pretensions the UK might have of recovering “science superpower” status.

    Instead, I believe there needs to be realism and honesty – both about the difficulty of the post-pandemic fiscal situation, and the need for genuine increases in government spending in R&D if its long term economic and climate goals are to be met. £22 billion is about the right figure to aim for, but if the extraordinary circumstances of the pandemic make it difficult to achieve this on the original timescale, the government should set out a new timescale, with a fully developed timetable outlining how this increase will be achieved in order to deliver the 2027 2.4% R&D intensity target. Early increases should focus on the areas of highest priority – with, perhaps, highest priority of all being given to net zero. Climate change will not wait.

    Bleach and the industrial revolution in textiles

    Sunshine is the best disinfectant, they say – but if you live in Lancashire, you might want to have some bleach as a backup. Sunshine works to bleach clothes and hair too – and before the invention of the family of chlorine based chemicals that are commonly known as bleach, the Lancashire textile industry – like all other textile industries around the world – depended on sunshine to whiten the naturally beige colour of fabrics like cotton and linen. It’s this bright whiteness that has always been prized in fine fabrics, and is a necessary precondition for creating bright colours and patterns through dyeing.

    As the introduction of new machinery to automate spinning and weaving – John Kay’s flying shuttle, the water frame, and Crompton’s spinning mule – hugely increased the potential output of the textile industry, the need to rely on Lancashire’s feeble sunshine to bleach fabrics in complex processes that could take weeks was a significant blockage. The development of chemical bleaches was a response to this; a significant ingredient of the industrial revolution that is perhaps not widely appreciated enough, and an episode that demonstrates the way scientific and industrial developments went hand-in-hand at the beginning of the modern chemical industry.

    It’s not obvious now when one looks at the clothes in 17th and 18th century portraits, with their white dresses, formal shirts and collars, that the brilliant white fabrics that were the marker of their rich and aristocratic subjects were the result of complex and expensive set of processes. Bleaching at the time involved a sequence of repeated steepings in water, boiling in lye, soaping, soaking in buttermilk (and towards the end of this period, dilute sulphuric acid) – together with extensive “grassing” – spreading the fabrics out in the sun in “bleachfields” for periods of weeks. These expensive and time-consuming processes were a huge barrier to the expansion of the textile industry, and it was in response to this barrier that chemical bleaches were developed in the late 18th century.

    The story begins with the important French chemist Claude-Louis Berthollet, who in 1785 discovered and characterised the gas we now know as chlorine, synthesising it through the reduction of hydrochloric acid by manganese dioxide. His discovery of what he called “dephlogisticated muriatic acid” [1] was published in France, but news of it quickly reached England, not least through direct communication by Berthollet to the Royal Society in London. Only a year later, the industrialist Matthew Boulton and his engineer partner James Watt were visiting Paris; they met Berthollet, and were able to see his initial experiments showing the effect chlorine had on colours, either using the gas directly or in solution in water. The potential of the new material to transform the textiles industry was obvious both to Berthollet and his visitors from England.

    James Watt had a particular reason to be interested in the process – his father-in-law, James McGrigor – owned a bleaching works in Glasgow. Watt had soon developed an improvement to the process for making chlorine; instead of using hydrochloric acid, he used sulphuric acid and salt, exploiting the new availability and relative low cost of sulphuric acid since the development of the lead chamber process in 1746 by John Roebuck and Samuel Garbett. In 1787 he sent a bottle of his newly developed bleach to his father-in-law, and arranged for a ton of manganese dioxide [2] to be sent from Bristol to Glasgow to begin large scale experiments. Work was needed to develop a practical regime for bleaching different fabrics, to find methods to assay the bleaching power of the solutions, and to develop the apparatus of this early chemical engineering – what to make the vessels out of, how to handle the fabric. By the end of the year, with the help of Watt, McGrigor had successfully scaled up the process to bleach 1500 yards of linen.

    Meanwhile, two Frenchmen – Antoine Bourboulon de Boneuil and Matthew Vallet – had arrived in Lancashire from Paris, where they had developed a proprietary bleaching solution – “Lessive de Javelle” – which built on Berthollet’s work (without his involvement or approval). This probably used the method of dissolving the chlorine in a solution of sodium hydroxide, which absorbs more of the gas than pure water. This produces a solution of sodium hypochlorite, like the everyday “thin bleach” of today’s supermarket shelves. In 1788 Bourboulon petitioned Parliament to grant them an exclusive 28 year license for the process (a longer period than a regular patent). This caused some controversy and was strongly opposed by the Lancashire bleachers, but placed James Watt in an awkward position. Naturally he opposed the proposal, but didn’t want to do this too publicly, as his own, very broad, patent (with Matthew Boulton) for the steam engine had been extended by Act of Parliament in 1775, leading to lengthy litigation. Nonetheless, after the intervention of Berthollet himself and the growing awareness of the new science of chemical bleaching in the industrial community, Bourboulon only succeeded in obtaining patents for relatively restricted aspects of his process, that were easily evaded by other operations.

    Claude-Louis Berthollet’s position in this was important, as his priority in discovering the basic principles of chlorine bleaching was universally accepted. But Berthollet was an exponent of the principles of what would now be called “open science” and consciously repudiated any opportunities to profit from his inventions – as he wrote to James Watt, “I am very conscious of the interest that you take in a project which could be advantageous to me; but to return to my character, I have entirely renounced involvement in commercial enterprises. When one loves science, one has little need of fortune, and it is so easy to expose one’s happiness by compromising one’s peace of mind and embarrassing oneself”. Watt was clearly frustrated by Berthollet’s tendency to publish the results of his experiments, which often included rediscovering the improvements that Watt himself had made.

    But by this stage, any secrets were out, and other Manchester industrialists, together with a new breed of what might be called consulting chemists, who kept up with the latest scientific developments in France and England, were experimenting and developing the processes further. Their goals included driving down the cost, increasing the scale of operations, and particularly improving their reliability – it was all too easy to ruin a batch of cloth by exposing it too long or using too strong a bleaching agent, or to poison the workmen with a release of chlorine gas. In fact, one shudders to think about the health and safety record and environmental impact of these early developments. Even by 1795, it still wasn’t always clear that the new methods were cheaper than the old ones, particularly for case of linen, which was significantly more difficult to bleach than cotton. Despite the early introduction of “Lessive de Javelle”, the stability of bleaching fluids was a problem, and most bleachers preferred to brew up their own as needed, guided by lots of practical experience and chemical knowledge.

    Bleaching probably could never be made entirely routine, but the next big breakthrough was to create a stable bleaching powder which could be traded, stored and transported, and could be incorporated in a standardised process. Some success had been had by absorbing chlorine in lime. The definitive process to make “bleaching powder” by absorbing chlorine gas in damp slaked lime (calcium hydroxide), to produce a mixture of calcium hypochlorite and calcium chloride, was probably developed by the Scottish chemist Charles Macintosh (more famous as the inventor of the eponymous raincoat). The benefits of this discovery, though, went to Macintosh’s not wholly trustworthy business partner, Charles Tennant, who patented the material in 1799.

    What are the lessons we can learn from this episode? It underpins the importance of industrial chemistry, an aspect of the industrial revolution that perhaps is underplayed. It’s a story in which frontier science was being developed at the same time as its industrial applications, with industrialists understanding the importance of being linked in with international networks of scientists, and organisations like the Manchester Literary and Philosophical Society operating as important institutions for diffusing the latest scientific results. It exposes the tensions we still see between open science and the protection of intellectual property, and the questions of who materially benefits from scientific advances.

    As the nineteenth century, the textile industry continued to be a major driver of industrial chemistry – the late 18th century saw the introduction of the Leblanc process for making soda-ash, and the nineteenth century saw the massive impact of artificial dyes. These developments influence the industrial geography of England’s northwest to this day.

    [1] When Berthollet discovered chlorine, it was in the heyday of the phlogiston theory, so, not appreciating that what he’d discovered was a new gaseous element, he called it “dephlogisticated muriatic acid” (muriatic acid being an old name for hydrochloric acid). As Lavoisier’s oxygen theory became more widely accepted, the gas became known as “oxymuriatic acid”. It was only in 1810 that Humphry Davy showed that chorine contains no oxygen, and is in fact an element in its own right. Phlogiston has a bad reputation as a dubious pre-scientific relic, but it was a rational way of beginning to think about oxidation and reduction, and the nature of heat, giving a helpful guide to experiments – including the ones that eventually showed that the concept was unsustainable.

    [2] It’s interesting to ask why there was an existing trade in manganese dioxide. This mineral had been used since prehistory as a black pigment, and is unusual as a strong oxidising agent that is widely found in nature. In Derbyshire it occurs as an impure form known to miners as “wad”; when mixed with linseed oil (as you would do to make a paint) it occasionally has the alarming property of spontaneously combusting. This was recorded in a 1783 communication to the Royal Society by the renowned potter Josiah Wedgwood, who ascribed the discovery to a Derby painter called Mr Bassano, and reported seeing experiments showing this property at the house of the President of the Royal Society, Sir Joseph Banks. Spontaneous combustion isn’t a great asset for a paint, but at lower loadings of manganese dioxide a less dramatic acceleration of the oxidation of linseed oil is useful in making varnish harden more quickly, and it was apparently this property that led to its widespread use in paints and varnishes, particularly for ships in the great expansion of the British Navy at the time. More pure deposits of manganese dioxide were found in Devon, and subsequently in North Wales, as the bleach industry increased demand for the mineral further. The material gained even more importance following Robert Mushet’s work on iron-manganese alloys – it was the incorporation of small amounts of manganese that made the Bessemer process for the first truly mass produced steel viable.

    [3] Sources: this account relies heavily on “Science and Technology in the Industrial Revolution”, by A. E. Musson and E. Robinson. For wad, “Derbyshire Wad and Umber”, by T.D. Ford, Mining History 14 p39.

    Edited 23/8/21 to make clear that Bourboulon’s petition to Parliament was for a longer period of exclusivity than a standard patent. My thanks to Anton Howes for pointing this out.