Innovation can light the way through the dark economic tunnel the UK is entering today
Today’s Budget saw the Government recommitting to its innovation agenda after Jeremy Hunt, the chancellor, announced that public funding for R&D (research and development) will increase to £20bn by 2024/5. With the economy stuck in a potentially prolonged period of recession, the importance of such a policy cannot be underestimated.
The Chancellor is correct to identify that despite the short term challenges we all face, we must continue supporting the parts of our economy that hold the key to delivering the levels of growth we will need in future years to meet the commitments he made today.
The Oxford-Cambridge Arc – which currently accounts for seven percent of England’s economic output – could go grow to £235 billion by 2030 with the right support and already provides over two million jobs. The region is home to some of the UK’s most innovative life sciences and technology businesses, as well as giants such as Cambridge-based Apple, Microsoft, and AstraZeneca.
The ideas and businesses growing around our world class universities are the country’s Crown Jewels. In his speech Hunt cited that the then UK has ‘a genius for innovation‘ and he is right. He was also right to reaffirm the Government’s commitment to turning Britain into a new Silicon Valley and live up to its commitment to create a Scientific Superpower here in the UK.
But this rhetoric also relies on tangible action so at Bidwells we are pleased to see Hunt also reaffirming a commitment to follow through on completing the final section of East West Rail.
This is the minimum Hunt was required to do today to avoid making the country's productivity problems much worse over the longer term. The watering down of the planned Investment Zones project was disappointing but expected news, however, it was encouraging to hear there is still a plan to use this policy to support the growth of innovation clusters across the UK.
If this means places like Oxford and Cambridge can also capitalise on this policy then it will have been a very sensible, long-term looking Budget delivered at a time when short-term pressures must also drive decision making. Productivity is till the biggest economic problem the UK economy faces.
However, increasing productivity from high-growth sectors like life sciences, aviation and renewable energy also relies on collaboration across the public and private sectors. Bidwells convened a conference of the UK’s scientific research community and real estate leaders in the Summer to discuss how Government can live up to its much-stated ambition to make the UK a Scientific Superpower. Delegates were in full agreement that a chaotic planning system, the glacially slow pace of infrastructure delivery and the threat of global competition is holding back the UK’s economic growth.
Today’s Budget calls are good news but there is still much to do to realize the region’s full potential. The recently announced locally-led pan-regional partnership across Oxford and Cambridge aims to secure the potential of the region’s high-growth clusters. Branded the Oxford to Cambridge Pan-Regional Partnership, the new body will bring together around twenty local partners including councils, Local Enterprise Partnerships and the Arc Universities Group to create a centrally coordinated body that will help deliver long-term, strategic growth.
As revealed by our landmark Radical Capital report, the Oxford-Cambridge Arc has the ingredients to supercharge economic growth, but a lack of coordination on development, skills and investment policy could mean the UK economy misses out on £50 billion of GVA by 2030.
But growth must be socially responsible, inclusive and align with the Government’s own environmental principles. Growth must be done for local communities, not to them. Maintaining momentum on the delivery of the East West Rail line (EWR), a new railway that will join together the high-growth clusters in Oxford and Cambridge with places like Aylesbury, Bicester and Bedford, while simultaneously helping to reduce the carbon emissions associated with road transport, will have benefits for us all and that must be made clearer.
EWR will also provide new rail links to Milton Keynes, an essential part of the Government’s Silicon Valley ambition, by providing a cheaper and more sustainable alternative to traveling. Connecting key towns and cities will also ensure that the UK’s top science and technology companies have access to top-tier talent and that the benefits of this growth is felt by all.
As Liz Truss’s now defunct Plan for Growth rightly identified, the UK needs to focus on its strengths in order to improve global competitiveness and enhance our ability to build back better from the pandemic. By exploiting the opportunity presented by the Arc for the benefit of the broader UK economy it will help to level up regions by stimulating business development, supply chains, academic collaborations and training for R&D-intensive sectors.
For example, for every £1 invested in University of Oxford R&D activities £10.30 is already generated for the wider UK economy. The Arc will stimulate new public and private sector investment, as much of today’s progress in science and technology is derived through partnerships with academics, institutions and specialist businesses spread throughout the UK.
During his time as chancellor, the now-Prime Minister Rishi Sunak was the architect behind the Conservatives’ innovation agenda - he was the driving force behind the R&D budget increases while and created the £375 million Future Fund: Breakthrough, which sees the Government co-invest in fast-growing firms alongside the private sector. With British R&D at an inflection point, it’s important that the PM continues pushing such an agenda by creating and engaging with long-term strategic plans, such as those being devised by the Oxford to Cambridge Pan-Regional Partnership.