We’ve had a busy start to 2025 at NCUB, with several high-profile opportunities to submit evidence to policymakers on the key challenges affecting the future of collaboration within innovation.
In January, the team submitted a detailed response to the House of Commons Science, Innovation and Technology Committee’s inquiry into innovation, growth, and the regions. This blog brings you a digest of the main points we raised, highlighting the key role of university-business collaboration in regional innovation. We’re also considering what’s next for innovation place policy, in the context of the Government’s ambitions for further devolution and the Industrial Strategy.
This is an important inquiry, and we welcomed the Committee’s interest in understanding how research and innovation support economic and productivity growth across the UK. It is no secret that there are considerable regional variations in public and private R&D expenditures. Business R&D spending is concentrated in London, the South East, and East of England: these three regions accounted for nearly three-fifths (58.4%) of total business R&D spending in 2023.
Addressing regional disparities is crucial, and in our response, we were keen to demonstrate the pivotal role of universities and collaboration in fostering regional economic growth and innovation. Their capacity to drive economic growth was recognised in the Witty review in 2013, which recommended that universities be given a new ‘Third Mission’ alongside research and education.
Universities are anchor institutions within their local areas, and they collaborate extensively with companies of all shapes and sizes. This collaboration enhances business competitiveness through knowledge exchange, helping them compete globally and increasing productivity. Collaboration will often lead to commercialisation, be that through licensing, academic publications, or spin-outs.
Benefits also spill over into skills systems and workforce alignment planning. NCUB research shows that when they work with businesses, universities are better able to build a picture of the skills needed within their local area, and evolving demand. They play a crucial role in training individuals with the necessary skills for specific sectors and collaborate with businesses to advance innovations.
As part of its inquiry, the Committee is considering the effectiveness of regional innovation hubs and clusters, and we emphasised that clusters are most effective when universities are involved. Some examples include the West Midlands Advanced Manufacturing cluster, and the Life Sciences cluster in the Liverpool City region – both of which have been identified in the Government’s new Industrial Strategy. Indeed, we have many fantastic examples of universities and businesses collaborating and helping meet the Government’s five missions.
Universities also help attract foreign direct investment into their regions. Collaborations with universities, rather than other private sector firms, are attractive to overseas investors due to the protection of intellectual property and the robust research environment they offer.
The role of government in supporting innovation
Our response focused on the importance of collaboration to regional innovation, and there are several funding mechanisms and policy initiatives that support this. This includes the Higher Education Innovation Fund (HEIF), Strength in Places Fund (SIPF) and UK Research Partnership Investment Fund (UKRPIF), to name a few. Of course, one of the main supports for collaboration has been the European Regional Development Fund (ERDF). However, the UK’s departure from the EU has led to a reduction in funding for universities to engage with businesses. Whilst efforts have been made to mitigate this, through the UK Shared Prosperity Fund, they have not matched the levels provided under the ERDF.
We are likely already seeing the consequences of this, as seen in our latest State of the Relationship report for 2024.
If the UK really wants to address regional imbalances it must acknowledge the crucial role universities play in their local areas to support economic growth. Despite the clear benefits, financial pressures on universities and businesses pose challenges to sustaining high levels of collaboration. The loss of funding schemes like ERDF has made it more difficult for universities to engage with smaller businesses, emphasising the need for continued support.
Our analysis has shown that the public sector has an important role to play in catalysing private sector R&D: each £1 of public R&D investment can potentially generate between £3.09 and £4.02 in private R&D investment. Other fundings streams, such as HEIF, have been shown to deliver up to £15 for every £1 invested, close to double the previous estimates. The presence of universities makes an area more attractive to businesses when thinking of where to invest in R&D. We need a thriving university sector, if the Government is going to achieve its aims in the Industrial Strategy.
Where next for regional innovation?
You can find our full response here, and we look forward to engaging further with the Commons Science, Innovation and Technology Committee on their inquiry.
As part of a new series, we have also developed a briefing on current place-based policymaking, and what it means for university-business collaboration. This briefing – available exclusively to NCUB members – will be published shortly on our website, so do check back soon. We’ll be publishing further policy briefings in the coming weeks and months, on topics such as apprenticeships, and private investment in skills.
Policy Lead – Research & Innovation
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