Relaunch UK regions as the #1 destination for global R&D - CBI

CBI Director-General Carolyn Fairbairn will be launching a ground-breaking report at the opening of Reckitt Benckiser’s (RB) new £105 million Science and Innovation Centre in Hull — marking the biggest single investment in RB’s history.

The new report shines a light on the businesses across the UK who are undertaking pioneering research, development and innovation in areas from aerospace to agriculture. Yet ‘Don’t wait, innovate’ finds that not enough of this R&D is currently happening across the UK – risking progress on achieving the target of 2.4% GDP spend on R&D by 2027 and the longer term aim of 3%.

The UK currently spends 1.7% of GDP on R&D - far below the 2.4% OECD average - and UK investment is particularly limited outside of the South East.

Just three regions account for 52% of UK R&D spend (London, South East & East of England) and just five of the UK’s forty sub-regions are investing over 3% of GDP. A greater focus on accelerating R&D investment in the worst performing regions could provide a £7.3bn boost to UK R&D spend, bringing the 2.4% target for R&D spend within grasp.

‘Don’t wait, innovate’ argues that the UK must capture the benefits that flow from improving innovation-led growth across the country – by creating new regional network of Catapult Quarters across the UK.

These would encourage industry to collaborate regionally on the key challenges that face our country - like clean growth, healthy ageing, the future of mobility and AI – with targeted and practical support.

Felicity Burch, CBI Innovation & Digital Director, said:

“For centuries, the UK has been a home for global innovation.  Scientific progress has not only transformed our economy, it’s been the single biggest driver of productivity and helped tackle some of our society’s biggest challenges.

“But with the continued political uncertainty and our competitors investing more in innovation, the next Government must re-launch the UK as one of the best places in the world to imagine, invest and invent.  This report lays out concrete initiatives that can kickstart public and private investment across our country.

“By running with this agenda, business and Government can in partnership unleash the innovative potential of towns and cities throughout the UK.  From St. Austell to St. Andrews, there are already a wealth of successful stories of companies coming together in their regions to the benefit of society and the economy.

“Imagine - if R&D spending increases to at least 3% of GDP and Catapult Quarters are created - how much further could the UK grow its successful innovation-based economy and break ground on the grand challenges of our time.”

CBI recommendations for the next Government include:

Setting out a roadmap for raising UK R&D activity within its first year of office

Policymakers should set out a long-term trajectory for Government spending and include measures to ramp up public funding support for Innovate UK; drive innovation through Government procurement; and push innovation diffusion throughout the UK economy.

Jumpstarting innovation activity across the UK with new ‘Catapult Quarters’

To spur a national R&D movement that capitalises on areas of existing and burgeoning strength, the next Government should establish a series of new ‘Catapult Quarters’ throughout the country to support new ideas and innovation

Catapult Quarters would build on existing regional R&D strengths in a coordinated way, bring together local policy leaders and the services local businesses need to collaborate and commercialise their ideas. This would range from specialist in-house support, equipment, expertise, facilities to land access - all in one place

Catapult Quarters would be set up around clusters of existing or fledgling industry activity and would be attached to anchor institutions like existing Catapult Centres or Research Technology Organisations (RTOs)

By bringing together expertise and capabilities, Catapult Quarters would together help to create an internationally competitive brand for UK innovation.

Establishing robust methods for measuring impact and success

Turning the dial on regional investment performance will require a more concerted focus on evaluating impact and monitoring progress

To support such efforts, UK Research and Innovation and the Office for National Statistics should work together to develop a new measurement tool to expand the R&D Foreign Direct Investment (FDI) statistics so that it captures regional and sectoral breakdowns of R&D FDI.

Notes to editors

Data sources

Data on regional R&D investment levels shows gross expenditure on R&D by UK region in 2017. The data is sourced from - ONS (2019) Gross domestic expenditure on research and development, UK: 2017. This data can be found on page 44 of the report and here

Data on ‘sub-regional’ R&D investment levels show R&D as a percentage of GDP in 2016 by the UK’s NUTS 2 statistical regions. The data is sourced from - Eurostat (2019) Intramural R&D expenditure (GERD) by sectors of performance and NUTS 2 regions. This data can be found on page 45 of the report and here

The five of the UK’s forty sub-regions are investing over 3% of GDP are: East Anglia; Cheshire; Berkshire, Buckinghamshire and Oxfordshire; Bedfordshire and Hertfordshire; and Herefordshire, Worcestershire and Warwickshire. This data can be found on page 45 of the report and here

What are Catapults?

Catapults are not-for-profit, independent physical centres which connect businesses with the UK’s research and academic communities. Each Catapult centre specialises in a different area of technology, but all offer a space with the facilities and expertise to enable businesses and researchers to collaboratively solve key problems and develop new products and services on a commercial scale.

Methodology for £7.3bn figure:

Based on international comparisons from the Czech Republic, Denmark and Portugal we have increased regional growth rates in R&D spend above their baseline growth by the following amounts: 1% for the worst performing regions, 0.5% for medium performing regions and 0.3% for the best performing regions. This results in £7.3 billion additional R&D spend over the period 2020 to 2027.