Gaps in R&D spend fuel UK regional divides, report says

London, the East, and South East get nearly half of all funding despite representing just 21 per cent of the population, according to Nesta.

By Samir Jeraj

Skyscrapers and office buildings in the City of London, are pictured from across the River Thames on May 13, 2020, as people start to return to work after COVID-19 lockdown restrictions were eased. - Britain's economy shrank two percent in the first three months of the year, rocked by the fallout from the coronavirus pandemic, official data showed Wednesday, with analysts predicting even worse to come. Prime Minister Boris Johnson began this week to relax some of lockdown measures in order to help the economy, despite the rising death toll, but he has also stressed that great caution is needed. (Photo by Tolga AKMEN / AFP) (Photo by TOLGA AKMEN/AFP via Getty Images)

The economic divide between regions of the UK is being fuelled by differences in research and development spending, according to a recent report from Nesta.

The North of England, the Midlands, South West, Wales and Northern Ireland get £4bn less altogether than other regions every year. Furthermore, the report’s authors argue, the private sector would usually match the funding, therefore taking the gap to £8bn. These areas are still recovering from deindustrialisation, and suffer from “weak innovation systems”, the report adds.

“Place-blind” investment policies have failed to address the inequalities between parts of the UK, it argues. Currently, London, the East, and South East are getting 46 per cent of funding from government and charitable organisations despite only representing around a fifth (21 per cent) of the population. Jobs in industries well supported by research and development are usually better paid.

Nesta is calling for the government and other funders to increase investment in research and development, using the post-pandemic recovery to embed this into policy. The organisation is also asking that a quarter of the increase goes to cities and regions to develop their local economies, to create “innovation districts”, and to close the gaps between regions.

The UK invests around 1.66 per cent of its GDP in research and development, compared to 2.37 per cent, on average, for members of the Organisation for Economic Co-operation and Development (OECD), and lower than the rate in Germany or France. The UK government has pledged to raise its funding to march the OECD average by 2027.