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13 June 2012updated 07 Jun 2021 4:08pm

To fix Britain’s productivity problem, we need to talk about place

By Andrew Carter

Last week the CBI raised concerns that Britain does not spend enough on research and development to boost its flagging productivity. It found that, at current spending levels, the country will not meet its target until 2053.

It is right to be concerned about this, but too much focus on overall levels of R&D funding risks overlooking the importance of turning it from an abstract national concept into a policy with tangible benefits for people, firms and places across the country, not just in existing research hubs such as London and Cambridge.

A greater focus on “making innovation real” is important because technological innovation does not happen in a vacuum. It happens in places, and understanding the role that “place” plays not just as the location for innovation but also as the integrator of the various other inputs – skills, firms, research & development infrastructure – will be central to boosting the UK’s economic performance in the future and should be a core focus for the government’s Industrial Strategy.

The Sheffield City Region’s Advanced Manufacturing Park is a good example of the significance of “place as integrator”. It brings academic, government and business partners together in one place to develop new products, services and ways of working. It has been at the vanguard of shifting the city region from a place of mass manufacturing towards a place that is home to cutting edge technological research and development. Once perfected, the research is shared with places and firms not just in the city region but across the country in production centres like Airbus in Broughton in North Wales and Rolls-Royce in Sunderland, and indeed across the world.

The AMP is testament to what can be achieved when local and national interests understand the importance of working together. But it would have been unlikely to have been established at all if decision makers – private, public, and academic – had not had the foresight and appetite for risk to see the transformative effect that targeted R&D spending in a place such as Sheffield City Region could have.

The experience of the AMP tells us, that to boost productivity and deliver an effective Industrial Strategy, “place” must be front and the centre of the policy development process.

Ensuring that the jobs and skills development opportunities meet the current and future needs of firms requires a place based approach. Whitehall is too remote to meet this requirement, and local actors are much better placed to fix local problems. For instance, the AMP has been the site of a training scheme where over 1,000 apprentices have worked and received engineering qualifications on the site. This has worked because firms, local government and skills providers pool their knowledge about what is required and organise delivery to meet those needs. To repeat this success in other places, government should complete the devolution of the Adult Education Budget to the metro mayors and empower local leaders to find local solutions to their own skills challenges.

The government should also maximise the benefits of R&D spending by encouraging knowledge sharing between researchers and companies. Encouraging the take-up of patent-free research, as was done at Sheffield City Region Advanced Manufacturing Park, was a major factor in ensuring that the economic benefits associated with R&D were felt both in the immediate locality and across the country.

Having a high national R&D target is critical, particularly given our lamentable performance over the last few decades. Meeting such a target will be challenge. But an even bigger challenge will be ensuring that an increase in R&D funding delivers benefits for people across more of the country.

A greater role for place is vital because it enables us to coordinate policies, from taxation to skills and infrastructure at the level which can deliver tangible economic benefits for people. Leadership from cities is crucial to build the high-skilled, high-paying economy that will boost productivity, and ultimately raise national and local living standards.

Andrew Carter is Chief Executive of Centre for Cities.

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