The UK spending review is right to boost regional innovation

London: As economic growth in the UK has slowed, inequality has grown. This double challenge has reached a point where a wholesale rethink, or reinvention of our “variety of capitalism” is called for.

As part of this, a more inclusive industrial strategy needs to be place-based to address the spatial imbalances that have evolved over decades. Much of this has been said before and many of these issues are flagged in the government’s industrial strategy for the next decade – the latest in a long line of such documents.

But we are now at the point when the evidence and the data enable more precise policy interventions focused on the latent potential of individual city-regions, connecting transport infrastructure, housing, skills and business support.

The June spending review rightly highlights the need to focus on improvements to regional innovation systems, with universities playing a stronger role, as a means to promote more distributed and inclusive economic growth. Universities improve skill levels and develop new technologies, which both underpin firm-level innovation.

Hence, there is good reason to steer existing and new funding, particularly from the Department for Science, Innovation and Technology and UK Research and Innovation (UKRI), into place-based, industry-led programmes for inclusive growth. There is significant potential to commercialise a larger proportion of university-based R&D, better leveraged to improve local firm-level productivity and innovation.

This does not necessarily mean university-based research should be more focused on the needs of local industry. But it does mean that where there is existing alignment, funding should target the specific gaps in technology transfer, commercialisation and skills to enable firms to leverage university-based R&D to develop better products, services and processes. There are commercialisation opportunities where, for example, there is a cluster of firms in fields such as AI, translational medicine or creative industries and there are local universities that can contribute knowledge, skills or technology.