With an ambitious aim of tackling regional inequality, the Levelling Up White Paper (LUWP), published in early February 2022, presents the Government’s vision for regeneration and economic growth. Key to its policy programme will be investment and growth in the Research and Development (R&D) sector.

The LUWP commits to an overall national R&D investment target of £20 billion by 2024-25, while the Government’s Life Science Vision (July 2021) sets out its target for the UK (across government, industry and philanthropy) to invest 2.4 per cent of Gross Domestic Product (GDP) in R&D by 2027. 

ALLEVIATING THE BOTTLENECK THROUGH DECENTRALISATION

A key plank in the Levelling Up agenda is to 'boost productivity, pay, jobs and living standards' by increasing the R&D spend outside the South East by 40 per cent by 2030, while leveraging 'at least twice as much private sector investment over the long term to stimulate innovation and productivity growth.'

The reason for this is that historically these high productivity jobs have landed in the ‘Golden Triangle’ made up of London, Oxford and Cambridge. Over the last decade approximately 80 per cent of the venture capital raised by life sciences companies was headquartered in London, the South East and the East. The last three years have seen this rise to 86 per cent, driven by Oxford, Cambridge and London. This is significant considering that the UK as a whole has seen capital investment in life science grow from £5.75 billion in 2010 to £16.7 billion in 2020, a rise of 372 per cent. 

However, these markets are experiencing severe real estate bottlenecks and constraints. In the middle of 2021, Oxford reported 3.8 per cent lab space availability, while Cambridge reported close to zero per cent lab space availability (with only 30,000 sq.ft available space under offer as of July 2021).

Decentralisation of R&D funding, along with the significant increase in investment in R&D real estate, infrastructure and skills and education, could alleviate these bottlenecks.

Many top life science research institutions, centres of academic excellence and companies are spread throughout the UK, and are key hooks on which to base this decentralisation strategy. 

As noted in the White Paper, 'Levelling Up will only be successful if local actors are empowered to develop solutions that work for their communities'. There are many cities that stand out as credible and strong growth prospects for the life science and wider human health sectors (see map, below). The LUWP proposes to target £100 million of investment in Innovation Accelerator pilots in Greater Manchester, the West Midlands and the Glasgow City Region to foster clusters which leverage private-public-academic partnerships.

Opportunities around key institutional anchors to attract science and research business growth

BRIDGING THE SKILLS AND EDUCATION GAP

For regions to access the promised public sector R&D funding, and the potential private sector co-funding this could potentially unlock, regional areas will need to bridge skills and education gaps.

Research by PricewaterhouseCoopers for the Life Sciences sector in 2017 reports a multiplier effect of +2.5 for the UK. The life sciences supply chain presents a massive opportunity to attract manufacturing and services jobs, however at its core will still require access to in-demand advanced STEM degrees.

So, while research funding is key, and so is its decentralisation, so too is the funding of new universities, colleges and advanced degrees which will need to access funding beyond levelling up funding pots.

However, the opportunity here is not just the productivity boost of increasing education funding or feeding the R&D sector’s labour needs, but the opportunity for new institutions and campuses throughout the UK to anchor new Innovation Districts which attract private sector funding, and large indirect/spill-over benefits via boosts to productivity. 

While this will take upfront public sector investment, the return over the lifetime of these projects has the potential to repay the public sector several times. When assessing these projects, the business case needs to consider the wider benefits and effects that can occur.

The North and the South West need an injection of R&D funding to support jobs – key is to target and partner with key institutions

THE ROLE OF PLANNING IN ATTRACTING TALENT AND INVESTMENT

At the heart of facilitating this growth is the ability to attract and retain talent from national and global labour pools. The importance of the planning system delivering land and creating places where people want to live and work should not be overlooked. Planning policy and decision making must ensure sufficient housing supply (including affordable housing) as well as the creation of high-quality and well-designed communities with access to public transport and amenities.

For the first time, there is a clear commitment in the White Paper to 'set a more positive approach to employment land in national policy to support the provision of jobs'.

In the meantime, local planning authorities could be proactive in engaging with businesses and institutions in this sector to understand their needs and allocate land in the right places. The use of tools such as Local Development Orders and Brownfield Land Registers will assist to simplify planning and accelerate development. While zoning seems to have been dropped by the Government, the White Paper’s suggestions of further devolution and planning reform should provide even more tools for local planning authorities to deliver what is needed for their areas.  

Unlocking this potential requires local leaders to identify and promote the hooks or beacons that will attract investors and provide catalysts for growth, and to ensure the right environment is created to support it.

Further information

Contact Ryan McKenzie or Emma Andrews 

Savills Planning