The term ‘Cambridge Phenomenon’ was coined in 1980 to describe the incredible growth in innovation companies in the city over the previous decade. Elsewhere in the UK, life still seemed to still be stuck in post-industrial decline.
Today, the Golden Triangle of Oxford, Cambridge and London continues to sparkle, dominating Foreign Direct Investment (FDI), VC funding and economic growth, while major cities in the North and Midlands are still playing catch up.
It’s possible the COVID-19 pandemic has exaggerated the gap, not least in terms of global prestige – the UK has an ‘Oxford’ vaccine as opposed to a Manchester, Newcastle or Birmingham one.
That said, ‘levelling up’ is the flagship domestic policy of the day. Alongside it, there is a clear priority in the Treasury and BEIS to foster the development of an innovation-led, highly skilled economy, which will, over time, lead to a greater equality of education, health outcomes and career opportunities in all regions.
It’ll be interesting to see the detail of the Government’s new Levelling-Up White Paper this autumn in the context of post pandemic recovery, and amid reports of an ongoing arm wrestle between No 10 and No 11 Downing Street over spending priorities.
Creating an innovation economy makes sense on paper, but the devil is always in the detail and, in an ever-evolving and ‘results now’ political culture, of course in the delivery.
While we can clearly learn from places like Oxford and Cambridge in terms of their approach to building an innovation ecosystem and infrastructure, it’s far too simplistic to suggest policy-makers should ever transplant a previously successful blueprint onto other locations. It’s just not going to work.
The reason for this is simple – no two places are the same. In fact, even within city regions, there are clear examples of inequality. Take Greater Manchester for example, where the economic issues, needs and challenges vary enormously between places such as Salford and Stockport.
The answer, we believe, is to take a bottom-up approach that asks from the outset, ‘How can we create the best version of our town or city? What will success look like here?’
This is where data insights can help city leaders create the necessary economic policy that is going to deliver investment, jobs, skills and opportunities over the long term.
Our work on the £2.5bn Salford Crescent development for the English Cities Fund is an excellent example of this approach.
IDM’s data helped us to identify a number of technologies where there was existing academic research expertise locally and, critically, the opportunity for growth differentiated from other innovation-led approaches in Greater Manchester and beyond.
Naturally we looked at the existing business base around these specific sub-sectors and how they could drive inward investment. But, just as importantly, we looked at how those technologies could support the needs of the local population. This has resulted in a masterplan for Salford Crescent that will deliver lasting benefits for the community with innovation at its heart.
I believe such a holistic approach, where local needs and opportunities are identified as part of a collaborative process between city leaders, businesses, investors and the education sector will generate the economic and social outcomes we want to deliver in levelling-up the regions.
There is no magic bullet though.
While we often hear about how effectively the North is addressing the “brain drain” of its recent graduates to London and the South East, graduate retention is only one aspect of ensuring a skilled workforce to support innovation-led approaches. There is a chronic challenge around attracting graduates with five or more years’ experience of work to relocate to take innovation-led jobs in the North and Midlands.
Our data shows that only 4.3% and 5% of graduates who studied in London, the South East or East of England end up working in the North and Midlands five years later, which proves there is a pressing need to produce the employment opportunities that come from higher levels of growth aligned to dynamic industries.
People, talent, skills and experience will drive innovation, but cash, of course, is king and the life-blood for growing businesses.
Currently, by every measure, the Golden Triangle receives significantly more funding for innovation than the North and Midlands. For example, just 14% and 15% of Gross Expenditure on R&D up to 2018 went to the North and Midlands while the Golden Triangle received 53%. Both regions received 7% and 4% of EIS/SEIS funding compared to 86% to the Golden Triangle. Venture capital funding in 2020 was a mere 4% and 3% against 86%.
With success breeding success in innovation hotspots like Cambridge, it’s understandable that investors are tending to place their bets in the same ‘safe’ locations in their search for scalable innovative businesses. But without the cash to fund innovation in the regions, any innovation-led growth strategy is doomed to failure.
So, alongside data-led local growth strategies and innovation clusters, we also need a funding eco-system that provides end-to-end funding, targeted at key industry sectors, that supports businesses throughout their life cycle.
This will improve the growth potential for innovation-driven strategies and, over time, develop clusters for the key industrial sectors that will be at the core of growth in the North and Midlands in the future, delivering the meaningful economic levelling-up that we need.
This article first appeared in New Start Magazine: