FST JOURNAL

Summary:

• The research excellence of the country is internationally recognised, but we cannot carry on with the existing highly centralised funding model
• We have perpetuated a model where the parts of the country that have long benefited from significant levels of public sector R&D funding continue to get more
• The greatest distortion of public R&D funding is in the healthcare area, especially for infrastructure funding, which is heavily skewed toward London and the Greater Southeast. Place really does matter and populations which benefit from large amounts of health-related R&D generally have much better health outcomes
• We can raise the profile and value of existing schemes to encourage more devolved innovation funding into the regions. One obvious area is in capital investment and place-based schemes
• There is a financial viability gap for R&D infrastructure in the regions that does not exist in the Southeast. You need public sector funding to help plug that gap and make the private sector investment proposition work.

The short answer to the question of whether I think Science and Technology (S&T) budgets should be devolved to English regions is, yes. I will caveat that only to a limited extent. I don't believe, for example, that the whole of UKRI funding should be devolved to regions and I think the key question, is how we best use current systems and structures to better devolve some of the Research and Development (R&D) and innovation funding and not create a whole set of new structures and complexities which will make it even more difficult to do the things that we want to do. 

We all believe in the greater good of the country and the research excellence of the country is very strong. It is internationally recognised, and we have to make sure we protect that, but also we need to diversify that research excellence. What I do believe is that we cannot carry on with the existing model. It has failed. We have a highly centralised model and one of the most distorted economies in the developed world. The regions are underperforming economically compared to London and the Greater Southeast, and alongside that, we have major societal challenges in healthcare, education and so forth. I think those things are undoubtedly connected.

R&D funding

 Several years ago, when I was a member of EPSRC Council, people told me repeatedly that it didn’t matter where the research was done, because the whole country would benefit. However, I don't think we can say that is true. I don't think the current model we have works. We have perpetuated a model where the parts of the country that have long benefited from significant levels of public sector R&D funding continue to get more. Whereas those in the regions that traditionally receive much less funding continue to receive less. Some recent figures shared by Professor Richard Jones at the University of Manchester show that the greater Southeast of the UK has 36% of the population but accounts for 55% of total R&D funding. If you look at UKRI funding specifically, the investment per person inside the greater Southeast was £170. The investment per person outside the Southeast was £87 and I think that distortion in R&D expenditure has been amplified by government decisions around major research infrastructure over the past few years and indeed, decades. Two notable examples are The Diamond Light Source which was built in Oxfordshire at the expense of Daresbury in the Liverpool City region. The Crick Institute was founded in King's Cross London (not exactly a deprived part of the UK), and that has sucked huge amounts of biomedical research funding into the capital at the expense of the regions. Government has made some infrastructure investments outside of London and the Southeast, but I don't think anything has been of the scale of those two investments, and therefore the impact has been much more limited.

Healthcare inequalities

Perhaps the biggest distortion of all (and I thank my colleague, Professor Louise Kenny, for this information), is in clinical healthcare infrastructure funding. This was highlighted in a report published by the Northern Health Science Alliance (NHSA).

The report showed that the Northern Combined Authorities, (so the whole of the north of England) was awarded £49 million in healthcare infrastructure funding in 2022 to drive clinical research activity. However, there are individual buildings in London and the Southeast which receive more. For example, The Crick receives ca. £70 million. The Sanger Institute in Cambridge received ca. £115 million. This is a very significant difference. 

The statistic for spending on health care infrastructure in that year in the Liverpool City Region was £5.42 per person. For the population in Cambridgeshire, it was a factor of 30 more, at £160.84. But why does that matter? Well, healthcare R&D funding stimulates economic growth, as it does in all the sectors that we work in, but in healthcare, it matters because of health outcomes. All the evidence shows that the health outcomes for the population where the healthcare research is carried out is significantly better by up to 20 to 30%. We have major healthcare problems in cities and regions like Liverpool and the rest of the North and the Midlands. We’ve amplified inequalities as well as the problems over economic growth. Place really does matter. 

Appropriate levels of government R&D funding help retain highly skilled graduates, so they don't just move to London and the South East. It helps cluster in business and private sector investment, including foreign direct investment. It will increase the number of spin outs and spin in companies. It will help drive economic growth - one of the key missions of the new government. It provides attractive job opportunities for local people and in the specific case of healthcare funding, it should significantly improve health outcomes and reduce inequalities.

 What is the solution?

So how do we solve this? There is no simple answer, and I do not believe we can simply tear up UKRI and other R&D funding. We cannot channel all funding into particular regions, not least because I do not think the capacity and expertise within regions is actually commensurate with the work that would be required to deliver it. We also risk competition between regions and major duplication of effort, which would not help the nation. We all remember the ‘Regional Development Agencies’. I worked in Nanotechnology, and every region built a Nanotechnology Centre, which did not make sense.

 However, there are things that could be done which build on previous and existing schemes. These could be raised in profile and value to encourage more devolved funding into the regions. I think one obvious area is in capital investment. We have already talked about the impact capital investment has on R&D. Here at the University of Liverpool, The Materials Innovation Factory (MIF) which involves long-standing collaboration with Unilever, is a fabulous success story based on world class research in materials chemistry, long sworld-classtanding industrial collaboration and a history of delivery. The MIF facility was funded through the Government’s Research Partnership Investment Fund (RPIF), a nationally competitive and not a place-based scheme. It could be possible to put a place-based lens on future RPIF schemes to ensure that more of that funding went into the regions and were aligned with the innovation priorities of those regions.

 We also know that when private sector investment is required for capital funding, (for example in buildings, space for incubation, innovation, laboratory space and expensive facilities) which is much needed around the regions to promote spin outs, that's an expensive model. There is also a financial viability gap in the regions that is less prevalent in the Southeast and makes private sector investment much more challenging. You need more public sector funding to plug that gap and make the private sector investment proposition work. You can't charge the same rents for lab space in Liverpool, Newcastle and Leeds as you can in Oxford, Cambridge and London, but the building costs are similar. So there are ways that public sector funding help could address some of those challenges. 

 There are other existing and successful, place based innovation schemes that we need to expand and continue, for example Strength in Places, Innovation Zones and Investment Zones. More needs to be done to align with regional priorities and regional innovation plans.

 Finally, could we do something around low TRL Research Council Funding without damaging the excellence of the UKs research base? I think the answer is yes and I am going to borrow and idea from my colleague here at Liverpool, Professor Matt Rosseinsky, If you sit on a Research Council panel, there may be 10 proposals deemed to be excellent and above the threshold for funding, but in reality, there is only enough funding for four of those proposals, so six get rejected. Now suppose all four of those were from London and the Southeast, and number five and six were from the North. What you could do is say, we will only fund two in London and the Southeast and will fund one in Newcastle and Liverpool. You then get a place-based lens within the final decision making, but you do ensure that the excellence threshold is met.

None of this is easy, but I will come back to how I started. We cannot continue as we are. We have one of the lowest growth rates of any economy in the world. We have one of the lowest productivity of any economy in the world. The current model is not helping that. So, change is needed. There is my provocation.