By Mary Stuart, Vice Chancellor, University of Lincoln and Liz Shutt, Director of Policy, University of Lincoln and the Greater Lincolnshire Local Enterprise Partnership. You can find Liz on Twitter @LizShutt.
Successful advances in productivity remain a challenge for the UK and the drivers that have created the UK’s economic divergence are long-standing and complex. If our ultimate aim is to address economic inequality and enhance productivity, then a deeper appreciation of these factors beyond the input measure of the specifics of R&D funding will be vital.
The recent UCL / HEPI report Regional policy and R&D: evidence, experiments and expectations thoughtfully addresses the ongoing debate on the role of research funding in tackling inequalities in the UK. The report joins a wealth of analysis over the past year considering this issue in light of the announced increase in spending on research of 2.4% of GDP by 2027. Clearly the uplift in funding presents a significant opportunity to address a range of challenges for our R&D system, as broadened parameters enable the discussion to move beyond a zero-sum game. However, to tackle regional economic inequality, we must take a step back from R&D funding as the solution in order to gain a deeper appreciation of why parts of the UK experience sustained low productivity and the related inequality of income and opportunity. As Nick Hillman has highlighted ‘we must avoid talking more about the money than the uses to which any money is put.’
So, let us take a look at this from the perspective of one of the so-called ‘left-behind’ places, Greater Lincolnshire. Government has recognised the need for levelling up in the region, no less than five towns have been selected to develop Towns Deals. The north of the region, North Lincolnshire, on the basis of real growth in Gross Value Added (GVA), has not recovered from the effects of the financial crash, with an overall downward trend in performance from 2007/08 onwards. In some places less than 10% of the population are aged between 20 and 34; some locations have limited energy supply (no access to the grid); and low levels of connectivity (broadband, public transport and roads). The result of this is substantial pockets of significant deprivation and rural isolation. At the same time, coastal communities, with a heavy reliance on tourism and hospitality, appear especially vulnerable to the economic impact of the pandemic. The 2019 Local Industrial Strategy exercise undertaken in Greater Lincolnshire identified the following challenges in relation to relatively low levels of productivity and innovation across the region:
- R&D investment: R&D spend per inhabitant in Lincolnshire is just 21% of the East Midlands average and 18% of the UK average. Greater Lincolnshire ranked as the 3rd lowest Local Enterprise Partnership (LEP) for total business expenditure on R&D while Government Sector R&D expenditure makes up less than 1% of the total R&D spend for Greater Lincolnshire, compared to 3.5% in the East Midlands and 6.5% in the UK.
- Polarised innovation geography: There is a polarised picture of innovation with pockets of activity along the western and southern strips of the region but a significant part of the geography that has limited engagement. These are the areas that are particularly dispersed, in coastal or rural areas with smaller towns, poor infrastructure and lower skill levels.
- An overall negative business birth rate: Lower than expected levels of business start-ups potentially means less opportunity for scale ups and frontier firms and for expansion of the business base more generally.
- 88% of businesses are micro: As has been well documented, the ability of these businesses to engage with and absorb R&D is often low and we have found that has often been a barrier for both our European Structural and Investment Funds (ESIF) interventions and wider Knowledge Exchange activity.
- Over half of GVA & employment share are in the foundational economy: For example, infrastructure, retail banking, education, health and care. It has been argued that the foundational economy should attract more attention given that the emphasis on hi-tech industries has not translated into raised living standards for many households.
These characteristics of place have a strong bearing on the way in which a university, in this case, the University of Lincoln, and its regional partners operate. Yet, it is only part of the picture if our goal is to generate economic growth, increased productivity and better lives. In places such as Greater Lincolnshire, it is especially critical to build on local assets and develop shared agendas that make the most of any advantage over the long-term.
Indeed, this is the strategy that the University has followed over the last 12 years, in collaboration with employers, local communities, schools and colleges, health and care providers, business and industry, voluntary and charity, culture and heritage as well as with local government and decision-making bodies. The wider mesh of support generated through these partnerships is especially important for any dispersed economy, which may struggle to replicate the so-called agglomeration effect of larger cities as set out in most analysis. Clusters of research and innovation activity have been developed that deliberately link to the strengths and needs of the surrounding area for example, in agri- and food-tech, rural health and heritage. It is a dynamic and iterative approach with the University acting as a lynchpin between local industry, local industrial policy makers and the research base. Given the direct link between the left-behind agenda and globalisation, the University also works with global partners to address similar locally based challenges around the world.
Keeping this understanding of place in mind, let us now return to the issue of place-based R&D policy. It is well understood that the dual system of support from Research England and UKRI supports the baseline stability of the R&D system. However, beyond that, R&D investment includes a wide range of funding support that targets a range of different outcomes across the R&D spectrum. It is very easy for universities to simply focus on the R side of R & D but if the lens for development is in fact productivity and levelling up then a wider set of considerations come into play.
The University of Lincoln has made use of the full gamut of R&D investment alongside European Structural Funding, Regional Growth Funding, other local sources of investment as well as support from business and industry. Our experience is that lasting impact is created by the combination of different funds, secured through multiple partnerships and collaborations which are often underpinned by Quality Related funding. Alongside that, innovation and diffusion funding is likely to have a more direct impact on regional economic and productivity outcomes. Indeed, across Europe, regional innovation policy is often seen to be the appropriate level for supporting technology transfer. In line with this experience, we would add the following recommendations to the ones identified by UCL:
- A greater focus on technology transfer: Within this, it is important to maintain a mix of funding opportunities to support businesses at different stages of their development – from Innovation Vouchers through to Knowledge Transfer Partnerships and Innovate UK awards with Higher Education Innovation Funding (HEIF) playing a significant supporting role. A greater focus on joint development and collaboration is also important.
- Regional Growth Funding: The UK Shared Prosperity Fund must continue support for regionally focussed R&D activity that has previously been funded through EU Structural Funding and the Regional Growth Fund.
- Regionally focussed research funding: The Connecting Capabilities Fund alongside Strength in Places should be expanded and UKRI should seek to develop its regional level links in order to build local intelligence about the pocket of excellence that exist across the UK.
- Breadth of policy and funding interventions: Making a difference to deeply ingrained regional inequality across the UK will require a range of policy interventions and changes across the R&D investment portfolio and beyond. Focussing on individual funding pots will miss the bigger picture.
Ultimately, we need more stories about the experience of levelling up from places that don’t fit the models usually presented to help us understand what works in different parts of the country. In places that have not seen growth or development for some time there are different practices that have evolved through necessity, which are generating significant impact. These places are building on existing local assets with local partners because they don’t have the luxury to do it alone.