Is innovation inclusive in the UK? A look into the Nations and Regions approach to innovation
When techUK set out to understand what were the building blocks that make up a strong tech ecosystem (later defined as Local Digital Capital) there were some fundamentals that everyone agreed on.
People needed the skills to be able to engage with tech, to have a career in the sector, or in an ever connected world to be able to shop online, access services, communicate with family.
Flowing from skills component came digital infrastructure. All the skills in the world wouldn’t be much use if someone simply couldn’t get connected. The whirling circle of doom demonstrating a poor connection, staggered video images, buffering, or a lack of signal. All an indication of white spots across the UK that are holding communities, companies and careers back.
But skills, infrastructure and the adoption of tech in different parts of our economy and society wouldn’t be possible without the innovation – the technologies, techniques and methods addressing the challenges facing the UK - that underpins it.
But are all the UK’s nations and regions starting from the same place when it comes to benefiting from innovation?
The LDC Index breaks the data down by region (e.g. Scotland, East Midlands) and also by area (e.g. Eastern Scotland, Derbyshire and Nottinghamshire). Let’s first consider some regional data.
In London we can see that equity finance, SME lending and VC in tech is the highest in the UK. The South East, East of England and South West generally make up the next highest scoring regions. SME lending is £110billion in London, compared to £48billion in the North West, £43 billion in the West Midlands and £38billion in Scotland. VC investment in tech in Yorkshire & the Humber is 1.4% of London’s figure.
In fact R&D spend in the South East is £7.5 billion, more than the entire North of England (£5.4billion) or Midlands (£5.2billion). The figures aren’t much better for R&D tax credits or InnovateUK grants.
When we look at the area data in LDC Index for 2022 we can see a correlation between areas that feature in the top 10 for research and innovation also (generally) feature highly for finance and investment.
Let’s take for example Gloucestershire, Wiltshire, Bath and Bristol. The area is 5th in our Index for R&D and 8th for F&I. This is really positive news. The area has the most InnovateUK grants for AI and data economy in the UK, followed by Berkshire, Buckinghamshire and Oxfordshire, and the West Midlands. However all those areas have much lower R&D tax credits than Inner West London - some as such as the Gloucestershire, Wiltshire, Bath and Bristol area having only 14% of the Inner West London amount.
In our Index R&D spend is highest in East Anglia, Inner West London and Berkshire, Buckinghamshire and Oxfordshire. More urban areas, such as the combined authority regions of Greater Manchester, West Midlands and West Yorkshire, have less than half the R&D spend of the highest area.
This makes difficult reading for Northern and Midlands leaders, but also difficult reading for those concerned with harnessing R&D to support levelling up. And for those who know that levelling up doesn’t just mean areas in London and the SE of England with other UK cities, the Index data for R&D is even worse for rural areas such as Cornwall, Cumbria and Lincolnshire.
At this point, those reading could be forgiven for thinking the author is suggesting it’s ‘all rosy down south’. It’s not. Outer South, East and North East London struggle for R&D investment on every metric in the Index. And while investment in IT and inward investment in ICT is broadly similar with most other regions of the UK, it pales in comparison to inner London.
Even a measure like the number of high growth businesses in an area shows a wide difference. In Inner West London alone there are 1295 high growth businesses. That’s more than the whole of Scotland (745). That is no disservice to Scotland where the areas including Glasgow and Edinburgh have a respectable number of high growth businesses but more a reflection on how far ahead that part of London is. In fact Inner West London has more than double the number of high growth businesses compared to Berkshire, Buckinghamshire and Oxfordshire which is in second place on this measure.
Is innovation inclusive? It’s certainly not equal on a geographic basis; it’s not even close to being equal. Areas like the South East remain well ahead of other parts of the UK. Funding and support should be aimed toward backing the best and the brightest. However, when communities, companies and careers are being held back by underinvestment into the building blocks of innovation in the nations and regions, how can we be sure we are truly backing innovation?
techUK’s new tech and innovation campaign hopes to address some of these key challenges discussed in this insight and develop thinking on how the UK can thrive internationally through technology and innovation. With over 950 members working across a diverse range of technologies, and with strong networks across public, private and third sectors, techUK is uniquely positioned to convene technology leaders and ensure the innovation ecosystem is fit for purpose in the UK. For more information or to get involved, please visit our Innovation Hub and complete the ‘contact us’ form.
techUK – Supercharging UK Tech and Innovation
The opportunities of innovation are endless. Automation, IoT, AI, Edge, Quantum, Drones and High Performance Computing all have the power to transform the UK. techUK members lead the development of these technologies. Together we are working with Government and other stakeholders to address tech innovation priorities and build an innovation ecosystem that will benefit people, society, economy and the planet - and supercharge the UK as a global leader in tech and innovation.
For more information, or to get in touch, please visit our Innovation Hub and click ‘contact us’.
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Matt Robinson
Matt is techUK’s Head of Nations and Regions.
Laura Foster
Laura is techUK’s Head of Programme for Technology and Innovation.
