The current government is committed to a new “plan to fundamentally rewire the state by shifting power, funding and accountability from Whitehall to local leaders”. This includes giving local leaders much more power and responsibility to drive economic growth in their regions. Since one of the main rationales for government funding of research, development and innovation (RD&I) is to support economic growth, this opens up the question of the degree to which RD&I funding should itself be devolved. Here I attempt to summarise the rationale for devolution of RD&I funding and identify some potential pitfalls, before outlining some tentative principles.
What problems are we trying to solve?
The primary issue is the uneven level of economic development across the UK (as measured by regional productivity and disposable income). As shown by e.g. Philip McCann, Tom Forth, and others, one very important dimension of this is the underperformance of UK second cities. Meanwhile, there are persistent economic and social difficulties in coastal and rural peripheries. The government’s priority of “Good growth in every postcode” won’t be achieved without addressing these imbalances.
We know that innovation is the key to achieving sustainable productivity growth, and the private sector research and development, that produces new products and improved processes, is an important (if not the only) driver of the innovation that leads to productivity growth.
We know that, due to a well-understood market failure, private firms will tend to invest less in RD&I than would be societally optimal. This is the justification for public sector investment in RD&I. But the very spillovers that firms fail to benefit directly from, are what allows other firms in the area to raise their own levels of innovation, leading to the formation of sector-based geographical clusters.
Public RD&I spending can therefore support the formation and growth of such clusters. Geography remains important – despite the widespread availability of the products of scientific research, the application of knowledge to produce economic growth depends on tacit knowledge and the networks of people who hold that knowledge. Those networks are localised in specific places. The UK has been very successful at using public RD&I spending to create highly productive economic clusters, for example in Cambridge, and in the Kings Cross region of London, but these face other barriers to growth.
Currently, public RD&I funding is highly concentrated in the Greater Southeast. This means there is a significant opportunity to support and build high productivity clusters in those parts of the country that are currently economically lagging, by investing RD&I funding in a more place-conscious way, with the specific target of increasing levels of private sector research, development and innovation in those places.
Why might RD&I devolution help?
The key argument for devolution of RD&I funding is that local places have an understanding of their own economies that is more detailed and more granular, than it is possible for central government departments or agencies to have. They can create structures that bring together voices from innovation intensive businesses, from public sector R&D organisations like local universities, and officials and elected leaders from local and regional government – the so-called “triple helix”. Informed by such bodies, local places can have a better understanding of the areas of potential for growth of their economies, and of the barriers that restrict growth, than central government.
Across the UK, regional economies have very different shapes and different specialisms. Many of these specialisms are invisible, or only faintly discerned by central government. To give just one example, the chemical industry has delivered consistently high productivity growth over many decades, and remains important across much of the North of England, yet its interests have been almost entirely neglected by central government. The voice of local businesses is much more strongly heard in their own cities and regions than in Whitehall.
The growth of industrial clusters in high value, innovation intensive, exporting sectors – in support of the government’s “reindustrialisation” priority – will not be achieved by RD&I investment alone. Having set their own economic strategies based on this local knowledge, Strategic Combined Authorities can align RD&I investment with their other capabilities, in skills, transport and other hard infrastructure, in spatial planning, to maximise its economic potential.
In the wider context of the government’s “Rewiring the state” agenda, more local control of innovation spending addresses a perceived lack of accountability of national, arms-length bodies, and supports the government’s commitment to “support local places to reindustrialise by building on frontier sector and cluster strengths”. That said, the need for an arms-length body, incorporating independent expert science advice, to oversee government RD&I spending has been recognised for more than a century. UK Research and Innovation should maintain a central role as the overseer of the national RD&I system, building on and extending its recent work to incorporate more place-based perspectives in its strategy and operations.
What dangers might emerge from RD&I devolution?
There is a risk of poor decision making, due to lack of expert knowledge and failure to understand the national context, especially in Strategic Combined Authorities that are relatively newly established. The necessary connectivity between and engagement of SCAs, universities and businesses takes time to establish, while regional business sectors may not be effectively organised.
Weak governance could lead to conflicts of interest and capture by a few favoured incumbents. Places with weak economies with low levels of private sector innovation may be automatically disadvantaged by a lack of experienced representatives of business who have the time to devote to the wider interests of the region – this is particularly likely to be the case in economies which are dominated by SMEs rather than larger primes.
In many cases, economic geography doesn’t coincide with political geography. Poorly designed devolution could lead to a fragmentation of infrastructure, with competing facilities not at critical mass in neighbouring regions.
Political pressures could lead to diversion of RD&I funding to more immediate and politically salient priorities. Pressures to satisfy too many constituencies, combined with weak governance, could lead to the dividing up of RD&I funding into a large number of sub-critical pots.
What have we learned from past and existing place-based RD&I funding schemes?
There have been a number of previous place-based RD&I funding schemes, and it is important to learn the lessons – both positive and negative – from these initiatives. These include:
- Innovation funding by the Regional Development Agencies in the 2000s, funding from the European Regional Development Fund, and by devolved nations up to the present.
- Specific place-based funding run by UKRI and its component parts, including the Strength in Places Fund, the Innovation Accelerator pilots, Research Council place based impact acceleration accounts, Innovate UK’s Launchpad programmes, and the Local Innovation Partnership Fund. The last of these is perhaps the largest in scale and ambition, but is still ongoing.
- Funding whose primary purpose isn’t regional economic development, but which in practise has contributed significantly to this goal, including Catapult Centres, and various funding streams to promote university-business interactions and spin-out and start-up activity, including HEIF.
One positive outcome of these previous initiatives has been to increase the profile of innovation as a key component of regional economic development.
One key theme that is emerging is the power, not without tensions, of co-creation between regional triple-helix organisations and national agencies such as Innovate UK and Research England.
Some tentative principles for devolving RD&I spending
Basic discovery science needs peer review by experts who themselves are at the scientific frontier, and benefits from competition at a national (or indeed, supranational, as through the UK’s participation in the European Research Council) level. In the language of UKRI’s evolving strategy, the first priority, “Supporting discovery and curiosity-driven research” (“bucket 1”) funding should be entirely retained by UKRI.
Full RD&I funding devolution should be focused on the innovation end of RD&I; the goal should be to increase private sector R&D, to support the diffusion of innovations, and to build innovation capability in support of high productivity clusters in Strategic Combined Authorities, or otherwise to have a direct positive impact on their citizens.
For research in support of strategic government and societal priorities (“bucket 2”), UKRI will need to take an overarching national view, though they should always take into account the evolving geographical distribution of RD&I funding, and they may be able to work with places and regions, using their local knowledge and powers to mobilise additional resource in support of larger scale collaborations and programmes.
While the right spatial unit for RD&I devolution should be, in England, the Strategic Combined Authority, there needs to be a recognition that economic clusters may be larger than a single SCA, and incentives should be provided to support collaborative activities.
These collaborations could span neighbouring SCAs where they are spanned by a single sector cluster (e.g. industrial biotechnology and engineering biology, across Liverpool City Region, Greater Manchester, and Cheshire), or they could link disconnected regions where there are clear complementarities (e.g. Cambridge and Manchester).
Careful attention needs to be given to the situation in the devolved nations; although the economic logic probably suggests devolution to city-regions there too, there needs to be sensitivity to the different political situations in the devolved nations, and the right of their administrations to choose different paths.
Devolved RD&I funding should, at least in the initial stages, be ring-fenced for activities that fall within the Frascati definition of R&D. The expectation should be that SCAs will support their strategic RD&I investments by linked interventions in areas like skills, transport infrastructure, planning, access to finance, and attraction of inward investment.
A condition of RD&I devolution should be that SCAs develop robust “triple helix” governance arrangements, with strong representation of innovation-intensive private sector business, public R&D institutions such as HEIs, and SCAs. The governance arrangements should have robust safeguards against conflicts of interest, they should include real expert voices (including independent experts from outside the region), and they should have the political backing they will need to make difficult decisions about geographical and sector focus.
While the new landscape should encourage much more collaboration between HEIs, industry and SCAs, it is important to respect the autonomy of the collaborating institutions. They should be incentivised to support their local economies, but be given the freedom to deploy funding in support of those goals independently.
Many Strategic Combined Authorities will need help and support in developing suitably robust governance structures, and the analytical capacity needed to underpin good decisions. UKRI should develop explicit new capacity to support these developments, as well as to take an overview of the development of the national RD&I landscape.
Finally, it should be recognised that devolution of late stage RD&I funding alone will not be sufficient to counteract a geographical imbalance of government R&D spending that has been many decades in the making. National decisions about significant scientific infrastructure have long-lasting consequences, on the future attractiveness of their locations for both public and private R&D activities, and on the future economic trajectories of those places. In the future these decisions should not be taken without careful consideration of their long term consequences on regional innovation capacity.
Some further reading
Rewiring the State – Cabinet Statement, 31 July 2026
Science and the Economy, Royal Society, 2024
The UK ‘geography of discontent’: narratives, Brexit and inter-regional ‘levelling up’ , Philip McCann , Raquel Ortega-Argilés, 2021, Cambridge Journal of Regions, Economy and Society
Tackling the UK’s regional economic inequality: binding constraints and avenues for policy intervention, Anna Stansbury, Dan Turner & Ed Balls (2023) Contemporary Social Science
The Missing Four Billion: making R&D work for the whole UK. Tom Forth and Richard Jones, NESTA, 2020
UK Science and Innovation: Five Years since the Missing £4bn, Tom Forth and Richard Jones, 2025. In “Joining Up Pro-Productivity Policies in the UK”, NIESR Occasional Paper 65
Regional research and development subsidies are working. But not in the way most people think. Tom Forth, 2024