Two tests for devolving innovation

The government’s upcoming moves on devolution must align with innovation ecosystems, not create new boundaries

The ambition set out by Prime Minister Andy Burnham at the Innovation Nation Summit in Manchester is both welcome and exciting. The case for a research-driven, innovation-led economy, and for the UK to become the world's leading innovation nation, is compelling. It signals a renewed recognition of the central role that research, universities and innovation must play in delivering national prosperity.

But turning that ambition into reality requires more than investment and political commitment. It requires us to think much more carefully about the geography of innovation. Innovation does not happen neatly within administrative boundaries. It grows through networks of universities, businesses, investors, skills and supply chains that connect places, often across the political geographies through which government increasingly seeks to organise economic growth. An innovation nation cannot simply be built as a collection of disconnected innovation regions.

Last month, Chancellor John Healey chose the Manufacturing Technology Centre (MTC) in Coventry to deliver his first major speech on the Government’s plans to deliver growth. The setting mattered: it was a powerful, if perhaps unintended, illustration of precisely the kind of cross-boundary innovation ecosystem on which the UK’s ambitions depend.

The Manufacturing Technology Centre (MTC) was established through a partnership involving Loughborough, Birmingham and Nottingham universities, and has become an important part of the UK's advanced manufacturing innovation infrastructure. Yet its success is rooted in connections that reach well beyond any single city, mayoral authority or administrative region.

Its founding institutions, industrial partners and wider supply chains span multiple political geographies. The three universities sit within three different systems of local government: Birmingham is part of the West Midlands Combined Authority; Nottingham sits within the East Midlands Combined County Authority; and Loughborough is in Leicestershire, outside an equivalent mayoral strategic authority and navigating local government reorganisation. Yet the economic and innovation geography that made the MTC possible does not stop at any of those boundaries. Neither do labour markets, supply chains, research collaborations, or the relationships between universities and businesses.

This is not an argument against devolution, nor a complaint about those places that have secured it. Strong local leadership, clearer accountability and greater devolved powers can help places turn their assets into economic opportunity. But place is not the same thing as an administrative boundary. The geography of innovation is shaped by where capabilities connect, not simply by where lines have been drawn on a governance map.

The practical question is how we ensure that devolution strengthens local leadership without fragmenting the innovation systems on which regional and national growth depend.

Not short of assets

The underlying regional proposition is strong. The Midlands is home to around 12 million people, 20 universities and 30,000 researchers. Its universities attracted £6 billion in research funding between 2019 and 2024, with strengths spanning advanced manufacturing, health and life sciences, clean energy, digital technologies, quantum sensing and artificial intelligence.

There is also a strong record of creating companies. Since 2010, Midlands universities have produced more than 350 spinouts, attracting £1 billion in investment. But only five per cent have secured Series A investment, compared with 21 per cent of spinouts from the Golden Triangle. When Midlands businesses do raise investment at that stage, they tend to raise less and receive lower valuations – despite performing comparably on productivity, growth and intellectual property.

Public funding supports the research. Universities help companies through their earliest stages. Too often, however, the company, jobs and economic value then move elsewhere because specialist leadership, networks and growth capital are easier to find in London and the South East.

This is not a failure of entrepreneurial culture in the Midlands. It is a gap in the infrastructure around it.

Collaboration is not the soft option

Universities are often told that they should collaborate more. It is easy to say and considerably harder to organise. Institutions have different levels of commercialisation capacity, serve different local economies and operate with their own incentives, governance and priorities. Genuine collaboration takes time, trust and a willingness to recognise that the right expertise may sit in another institution.

Forging Ahead brings together 16 Midlands universities to put that principle into practice. Led by Loughborough University and supported by £10m from Research England and £6m of university co-investment, it is strengthening commercialisation capacity and making specialist support easier to reach across the region.

The test is practical: can a promising researcher or founder access the right support regardless of which Midlands university employs them? This requires institutions to share knowledge and capability rather than each trying to reproduce the entire system independently. The outcome we want is equally clear: more promising businesses starting, scaling and staying in the Midlands.

The Invest in UK University R&D – Midlands campaign applies the same approach to inward investment. It brings together 17 universities, supported by mayors, freeports and other regional partners, to present international investors with a coherent Midlands offer rather than a stack of separate institutional brochures. It has built a shared pipeline of opportunities across five sectors and tested a concierge approach to connecting investors with the right research, facilities and partners.

Investors do not buy administrative diagrams. They want to know where the expertise is, whether the workforce exists and how quickly a credible proposition can be assembled. Acting together gives the Midlands a better chance of answering those questions and of being noticed in a competitive international market.

Following the opportunity

The MTC is an established example of what cross-boundary collaboration can create. Infinity Park in Derby, on the other hand, is a live test of whether policy can continue to work in this way.

The emerging proposition at Infinity Park connects advanced manufacturing, prototyping, digital engineering and supply-chain development with major industrial capability already rooted in the region. Loughborough’s work with the University of Derby through the Institute of Technology also brings skills development into the proposition. That is important because the constraint on growth is rarely just the availability of technology. Businesses also need technicians, engineers, researchers and commercial leaders able to deploy it.

Neither the MTC nor Infinity Park is best understood as one university’s project, one city’s cluster, or one strategic authority’s economy.

Their value comes from assembling the right research, facilities, skills and industrial demand across a connected geography. The useful question is not which authority owns a proposition, but whether the right capabilities can be brought together around it.

Places outside the map

The emerging devolution map is uneven, while innovation capability is not distributed according to it. Loughborough’s research and industrial relationships extend across Leicester and Leicestershire, the East Midlands, the West Midlands and beyond.

Keele faces a similar challenge. Located in Newcastle-under-Lyme, it sits outside both established Midlands combined authorities, while its research, health, business and innovation relationships extend across north Staffordshire, Stoke-on-Trent and the wider Midlands.

Both universities have significant research strengths, business relationships and innovation assets. Those assets do not become less valuable because they lack an established mayoral front door. Nor should such places be made dependent on neighbouring structures in which they have no formal voice.

The risk is that public policy begins to treat strategic authority boundaries as though they are also the boundaries of an innovation ecosystem. That could determine which places appear in investment propositions, whose priorities are heard and who can access national funding. The absence of a strategic authority must not become shorthand for the absence of a strategy.

Different jobs for national and devolved policy

There is also an important distinction between research funding and place-based innovation policy.

Research funding should continue to be allocated nationally on the basis of excellence through expert peer review. Devolution has a different and complementary role: connecting research strengths to industrial demand, workforce skills, business adoption and investment.

Confusing those functions would risk narrowing research around political boundaries rather than building on the capabilities that already exist. It could also encourage neighbouring places to compete over research assets and supply chains that only make economic sense when viewed across a wider geography.

National and devolved policy should therefore reinforce one another. National research funding sustains the pipeline of ideas and expertise. Strategic authorities and regional partnerships can help turn those strengths into economic opportunities rooted in place.

Two tests for government

As the Budget approaches on 28 October, to be followed by a devolution white paper later this year, the government should apply two tests as it develops the next phase of devolution and place-based innovation policy.

First, funding should follow the economic and innovation geography of a proposition, even where it crosses strategic authority boundaries. National programmes should encourage cross-boundary collaboration and provide a direct route for places without an established mayoral authority. They should also sustain the connective capacity required to make collaboration work, rather than repeatedly funding short projects and allowing the relationships they create to disappear.

Second, government should maintain a clear division of labour. UKRI should continue to fund excellent research nationally. Devolved authorities should be enabled to connect that research with local and regional priorities for skills, adoption, infrastructure and investment.

The Midlands is already doing much of what government says it wants. Universities are sharing commercialisation capability. Investors are seeing a more coherent regional proposition. Research, skills and industrial strengths are being assembled around opportunities such as the MTC and Infinity Park. These collaborations do not replace strong local leadership. Rather, they are part of the infrastructure that allows local strengths to add up to something larger.

The Midlands does not need another map showing where its boundaries fall. It needs an innovation system that allows talent, ideas and investment to move across them. If growth is to reach every postcode, government must pay attention not only to the new centres of devolved power, but also to the relationships between them and to the places that sit outside their boundaries.

The Budget and white paper represent an opportunity for the Chancellor to turn this ambition into action – ensuring that innovation policy follows economic opportunity, wherever it emerges.

Dan Parsons is Pro-Vice-Chancellor for Research and Innovation at Loughborough University. Helen Turner is the Director of Midlands Innovation.