As the UK looks to new sources of economic growth beyond Brexit, businesses and policymakers are increasingly focusing on innovation as the key to maintaining the UK’s global competitiveness and create jobs and prosperity at home.
But with much of the country’s current innovation output generated by London and the South East, we need to harness the massive untapped potential of other major city regions – particularly the former industrial heartlands of the North – if we are to fulfil the ambition set out in the Government’s vision of a competitive economy that benefits people across the UK.
A quiet revolution has been going on in Northern cities for some time – as the Government’s Northern Powerhouse initiative recognises. Northern city regions are transforming into knowledge economies – measured by their intellectual capital, of which there is plenty. The mills that were once the engines of industry for the world are now home to new generations of wealth creators in high-growth sectors such as FinTech, healthcare innovation, precision engineering and Big Data.
Yet despite these significant opportunities, the North and Midlands are still lagging their Southern counterparts when it comes to official innovation measures. This is something the country must address if it is to successfully exploit the new ideas, skills and technologies that will cement Britain’s place at the forefront of this fourth Industrial Revolution that’s now underway.
So why innovation? Unlike other areas of economic activity, innovation – alongside increased investment and internationalisation – adds real value to our economy. It creates new market opportunities, new jobs and critically new sources of productivity – a particularly pressing issue for the UK following the publication of new ONS figures this week showing productivity slumping to its lowest level since the global economic crisis.
Innovation also has a multiplier effect, creating a virtuous circle that often leads to other opportunities for growth. Businesses that innovate typically invest more in skills and new product development and are more likely to export to new markets.
Radio Design in Shipley, Yorkshire is one such firm. Started by MD, Eric Hawthorn, in 2007 the company’s innovation-led products – infrastructure-sharing technologies for mobile network operators – have driven its exponential growth. The company is now a global concern employing over 450 people worldwide – including at its manufacturing base in Salts Mill, Saltaire, where 19th-Century Yorkshire industrialist Titus Salt laid the foundations for the original Northern Powerhouse. Radio Design continues to maintain its cutting edge through R&D collaboration with the University of Leeds, and is embracing the significant growth potential in the Indian market, which is the fastest growing mobile phone subscriber base in the world.
In Leeds City Region, we are taking innovation very seriously – building on our heritage as a forerunner of the Industrial Revolution to build a global reputation for 21st Century invention. We have the UK’s largest concentration of universities outside London, the largest manufacturing sector anywhere in the country and are bucking the national trend of graduates decamping for the capital, experiencing something that only one other city region in the country can claim: a graduate ‘brain gain’.
Earlier this year, our region was named by EY as among the top three destinations in England – and the best in the North – for foreign direct investment. World-leading businesses in the digital and tech sectors such as Sky, SkyBet and Perform Group are increasingly relocating or expanding their operations in the region thanks to our unique blend of skilled workers, well-networked research base and outstanding, affordable quality of life. The arrival of new companies in the region drives further innovation activity by creating new supply chains and opportunities for collaboration.
Yet despite these huge opportunities local companies aren’t taking advantage of innovation support and investment as much as they could. Leeds City Region currently attracts only 57% of the UK average investment per employee from Innovate UK, the government’s national innovation agency. At a meeting of leading Yorkshire innovators last week, some referred to this as the “Yorkshire problem” – that bullish pride and unwillingness to ask for help for which our region is renowned. To overcome this, the LEP and Innovate UK have just announced a partnership to encourage more small and medium-sized businesses to innovate and get their share of the support that’s on offer. We’ve also recently launched a £9.2m European-funded programme to make it easier for SMEs – which make up 99% of the Leeds City Region business base – to get access to R&D support from research institutions including the nine universities based in our region.
There is more that we can all do, however, to ensure that the UK remains one of – if not the – best place in the world to do business and innovate. Government needs to continue its investment in city regions like ours, and devolve more powers and funding to local leaders so that investment can be targeted to local strengths and opportunities. We need investment in more centres of excellence that recognise and exploit local strengths, such as our own Digital Health Enterprise Zone in Bradford, the 3M Buckley Innovation Centre and Textile Innovation Centre in Huddersfield or the new £40m Nexus Innovation and Enterprise Centre at the University of Leeds, which has been partly funded through our £1bn Local Growth Deal with Government. And we need to ensure that HS2 and Northern Powerhouse Rail are realised to maximise connections between our towns and cities and create the agglomeration effects of a single northern economic area in which innovation and new ideas can thrive.
Innovation support for businesses – whether from universities or the public sector – needs to be relevant to their needs, particularly the needs of SMEs that are so often the driving forces of innovation. And local planners and policymakers need to ensure that their towns and cities offer an ecosystem in which innovation can thrive.
Innovation cannot happen in isolation or be led by one particular sector or government department. It needs collaboration and cooperation to seize the opportunities we have through the Government’s Industrial Strategy, its commitment to continued devolution and the Brexit negotiations so that our City Region can continue to play its part in driving national prosperity – becoming a place where dynamic and cutting edge businesses such as Burberry and Channel 4 can locate, flourish and create jobs.
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