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CaSE takes a deeper look at the Levelling-up white paper

03 Feb 2022

Yesterday saw the publication of the Government’s long-awaited, flagship levelling-up white paper. But what will it mean for research and innovation across the UK? Our Assistant Director takes a closer look.

The white paper sets out 12 ‘levelling-up’ missions that Government wants to achieve by 2030. These cover issues ranging from crime to housing and well-being, including:

“By 2030, domestic public investment in R&D outside the Greater South East [London, the South East and the East of England] will increase by at least 40%, and over the Spending Review period by at least one third. This additional government funding will seek to leverage at least twice as much private sector investment over the long term to stimulate innovation and productivity growth.”

We’re pleased to see the Government’s continued commitment to increasing R&D investment and this recognition that R&D has a vital role to play in growth and prosperity for all parts of the UK. It’s also right that R&D investment is being considered as part of this broader package of measures, alongside skills and infrastructure. Our Power of Place report made it clear that improving infrastructure and housing will help equip places for increased research intensity and help to retain skilled people.

What will this mission mean?

Some voices in the sector have been concerned that levelling up the R&D landscape might come at the expense of the Greater South East (GSE) – an area which remains home to many of the UK’s leading institutions. However, with R&D investment rising substantially overall, our analysis suggests this will not be the case.

Over the current spending review period, the Government’s R&D budget will rise from £15bn in 2021/22 to £20bn in 2024/25, a rise of £5bn or one-third. Therefore the target in the white paper (a one third increase in spending outside the GSE by 2024/25) will simply maintain the current balance of R&D investment across the UK. However, this does represent a change in the long-term trend, which has seen the GSE’s share of investment increasing by about 1% a year since 2017. If the white paper’s target is achieved, this trend will be halted but not reversed.

While the overall target will stabilise the current distribution, the balance of different types of funding between the GSE and the rest of the UK may change. The white paper says BEIS (including UKRI) will:

 “…aim to invest at least 55% of its R&D funding outside the Greater South East by 2024‑25.”

According to the white paper’s technical annex, UKRI currently spends 51% outside the GSE but we do not have comparable figures for the remainder of BEIS spending outside UKRI. So, while UKRI’s balance of investment will certainly shift towards non-GSE areas, we can’t yet tell whether this will be counteracted or amplified by the shift in BEIS’s non-UKRI investments.

The need for data and details

Our ability to scrutinise the impact of this flagship policy change is severely limited by the lack of granular detail on how and where R&D investment is currently deployed across the UK. This is acknowledged in the white paper with a commitment that the ONS and Government Office for Science will work with all departments to collect and publish sub-national data on R&D spending. This will be critical for monitoring progress against the Government’s target.

We also need further details on how the Government intends to meet the target. The paper offers a few hints, stating that ‘place’ will become an important consideration for Departments when allocating their research investments. There is also a new organisational objective for UKRI 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”.

However, there is no detail on the criteria for making these funding decisions. From our work at CaSE, we know that investing in excellence, no matter how small or nascent, is the most effective way to build R&D strength and capacity. We look forward to the Government setting out the details on how it will take geographic location into account when making investment decisions.

Investing in local leadership

Local leadership that unites business, academic and civic expertise can maximise the effectiveness of R&D investment. The white paper recognises the importance of local leadership, but falls short of specifying the policy levers that will be provided to local leaders to maximise the impact of funding.

BEIS will invest £100m by 2024-25 to pilot three Innovation Accelerators, centred on Greater Manchester, the West Midlands, and Glasgow City-Region. These will be delivered day-to-day by UKRI and Innovate UK, with the funding process overseen by BEIS and UKRI. The white paper commits the UK Government to working closely with local partners to ensure the accelerators are a success.

Bolstering skills

And finally, the white paper contains a number of measures on schools and skills. In our report Inspiring Innovation we set out the importance of high-quality science education in schools. As part of its levelling up strategy, the Government should re-double its efforts to ensure that high quality education and experiences in science and innovation are made available to all children.

You can can read our original response to white paper, as well as our comments to The Times on the story.