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.