Innovation Deals

Dr Peter O’Brien, Executive Director

Tom Forth and Richard Jones’ recent report, ‘The Missing £4 Billion’, published by the innovation specialists, Nesta, presents in-depth analysis and a series of thought-provoking, yet practical, proposals on how to rebalance the current uneven geography of research and development (R&D) spending within the UK. The report is timely and has gained much attention, not least for the case the authors make for government to devolve 25 per cent of the planned uplift in R&D funding to nations, cities and regions. A stark statistic contained in the report is that large parts of the UK, including Yorkshire, are missing out on £4 billion a year in public R&D funding.  Add to that private investment, and the same regions are unable to access a further £8 billion per annum. Not insignificant sums when you consider the total investment that is needed to ‘level up’ the nations and regions.

In this blog, I want to focus specifically on Recommendation 2 in the Forth and Jones report. The report calls for devolved R&D funding in England, to cities and regions, routed via elected Mayors and Combined Authorities, provided they can demonstrate the capacity to allocate funding ‘wisely’. Funding would be devolved through proposed Innovation Deals. Deals and deal-making are subjects close to my research interests, having spent some time as an academic at Newcastle University, working alongside Andy Pike, reviewing the nature, processes and impact of devolution deals and city deals within and across the UK. Latterly, as a practitioner, in my role at Yorkshire Universities, I have advocated the case for the region’s universities in the development and implementation of devolution deals in Yorkshire.

There have been suggestions that the era of deal-making, prevalent in the 2010s, and set in the context of devolution and decentralisation, has run its course. In our research, Pike and I identified particular flaws with the deal-making approach; others have formed similar conclusions. At times, it has been overly labour intensive, uncertain, time-consuming, and stymied by narrow transactional processes where national and local institutions embark into negotiations with markedly different capacities, resources and objectives. However, there have been some positives, not least the tailoring of economic development initiatives to better-reflect local assets, the advent of new forms of accountability, the sharing of emergent and existing practice, and the arrival of mechanisms to integrate different public policy programmes within a defined sub-national geography. Outside of England, existing deals, especially in certain parts of Scotland, have embedded innovation at the heart of the deal. There are salient lessons from these bespoke deals, which could be disseminated and utilised in the new innovation deals proposed by Forth and Jones.

For example, the Edinburgh and South East Scotland City Region Deal is notable in many ways, but two things are worth highlighting. First, has been the planned scale of innovation investment underpinning the deal – to the tune of £751 million. Second, was the convening, place leadership role demonstrated by the University of Edinburgh, which was instrumental in the development of a cogent set of ideas and proposals and bringing these together in partnership with other universities, FE colleges, business and local authorities. This is a model replicated, albeit on a smaller scale, in the Stirling and Clackmannanshire City Region Deal. Here, during a study visit last October, I heard first-hand about how the University of Stirling had played an active role in driving the key activities in the deal, and in particular making the case for new R&D investment to be directed to the most deprived area of Clackmannanshire. In both cases, the common denominators were the visible backing and advocacy of university leadership, as well as a recognition of the value and importance of place and local and regional development and their direct symbiotic relationship to a traditional element of university ‘business’, such as R&I.

In thinking about how innovation deals could be rolled out in England, and which actors would be critical to their long-term success, the evidence from Scotland is that, aside from articulating a strong, evidence-based proposition, demonstrating effective local capacity and institutional governance is also pivotal. The experience of innovation-led deal-making north of the border suggests that universities have operated as place leaders because the system has encouraged and enabled this to happen and universities have chosen to assume this role. In the current climate, with competing priorities facing government and the enduring legacy of a highly-centralised state, replicating aspects of this model in England may not be straightforward. However, the experience of COVID-19 has increased the demands for greater place-based R&I and a renewed focus on spreading more innovation to the wider economy and for public benefit.  

There are genuine opportunities and practical reasons for universities and civic partners in the English regions to not only learn about, but also adapt, elements of good practice from Scotland. In Yorkshire, moves are afoot to do just this. Professor Charlie Jeffery, Vice Chancellor at the University of York, arrived in the region last September equipped with ideas honed from his direct experience of steering the Edinburgh City Region Deal through its formative stages. It is no surprise that transformational plans are being developed to connect and capitalise on the distinct R&I and educational capabilities and assets in York and North Yorkshire that could seed the ground for building a new innovation-led economy. In time, this case study could emerge as a pathfinder and even become a template for the kind of innovation deals that Forth and Jones advocate in the Nesta report.

Watch this space…

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