Innovation and academia the perfect match for Leeds City Region

Words by Roger Marsh OBE, Chair of the Leeds City Region Enterprise Partnership (LEP)

The UK is in the midst of a productivity crisis.

Mired in the worst decade of productivity growth since the 1820s and with continued uncertainties around the UK’s exit from the EU, there are well-founded fears that without a change, British business could be in for an increasingly bumpy ride. The story is further complicated by the fact that despite this, over the past year employment levels have, at times, reached record highs (latest ONS figures show that 32.08m people are in work – up 325,000 year-on-year) leading some to question, “where does further economic growth come from if there is limited space to keep growing the workforce?”.

These concerns have recently prompted central Government, nationally, and local enterprise partnerships like ours in Leeds City Region, locally, to place renewed emphasis on innovation as a means to raise our productivity rates.

New, better products and more effective manufacturing processes generally mean more globally competitive companies, rising numbers of better paid and better quality jobs (that also increase living standards) and longer-term economic growth – key priorities for all economies and a means of differentiating UK PLC in an increasingly competitive global market place.

However, it is fair to say that lower than national average productivity is a significant issue in the North. Here, in Leeds City Region our worker output per hour is just 87% of the UK average. This is despite being a £64bn economy and despite the fact we are the biggest City Region outside of London and the South East. It is particularly concerning when stats show that the UK average, itself, is still well behind its own pre-recession levels and is lagging 17% behind than our G7 competitors. Although this concern is not unique to us, we know that if we were to just match the UK average on productivity we would add £10bn GVA to the northern economy while also rebuilding our reputation as innovators who were the driving force behind the UK’s global dominance in the industrial revolution of the past. We’re a City Region that prides itself on our innovation heritage – we made mechanical parts that landed a spacecraft on a comet, for instance – and we also reflect fondly on our no-nonsense approach to getting stuff done. Therefore, we recognise there is a need for change.

The LEP made a good start to combatting the issue when, in 2014, we launched our Innovation Strategy “A smart specialisation approach”. Since then, we have listed innovation as a top 10 highlight in our Strategic Economic Plan and opened up our own innovation service to help local SMEs access funding and support, called Access Innovation. We have also recently improved links to the Government’s national innovation agency, Innovate UK, to help SMEs better access national support. However, data shows that SMEs in our City Region – and I’d be willing to bet right across the UK, too – struggle to see the long-term benefits of research, development and innovation when pitted against short-term barriers to success. In a recent survey, two thirds of businesses told us they would undertake more innovation if time and cost barriers were removed. This is held up by data that shows research and development spend in Yorkshire & Humber was £267 per head in 2015, a little over half the UK level of £486, and that investment accounted for a relatively low share of R&D spend in Yorkshire & Humber in 2015 – just 54% compared to 66% nationally.

Thankfully in Leeds City Region, we have a second ace up our sleeve, which we are delighted to see is now coming to fruition. With 14 colleges and nine universities, we’re home to one of the highest concentrations of Further and Higher Education establishments in the country. SMEs and businesses should, therefore, be in a position of great strength when looking for easy-to-access expertise in research and development. It is for this reason that, above and beyond our own support services, the LEP and West Yorkshire Combined Authority has also invested £3m into the Nexus innovation and enterprise centre due to open in autumn 2018 at the University of Leeds.

Branded as a gateway to world-class research and development – the University of Leeds is University of the Year 2017 (The Times and The Sunday Times' Good University Guide) – Nexus will provide access to key university research expertise, purpose-built workspace, much-needed laboratory space and a vibrant environment for SMEs to overcome the issues our local firms are seeing when faced with their own innovation quandary. And with SMEs making up as much as 99% of businesses in Leeds City Region, the impact of increased innovation and productivity on our economy cannot be understated.

For too long, SMEs have seen universities and educational and research establishments as ‘ivory towers’ – totally inaccessible and beyond the reach of their often much more modest means. It is my hope that Nexus, and the soon to be completed Huddersfield Incubation and Innovation Project at the University of Huddersfield (also part-funded by the LEP and Combined Authority), will combine to form a watershed moment in how businesses and SMEs access innovation support to give their own productivity levels - as well as those of Leeds City Region - a welcome shot in the arm.

For keep up to date with the progress at Nexus, visit: www.nexusleeds.co.uk

For more information on innovation support, visit the Access Innovation hub.