Making investment zones work

The government has a new place based innovation policy but should universities take part?

James Coe is Associate Editor for research and innovation at Wonkhe, and a partner at Counterculture

Policy makers put a lot of effort into getting knowledge out of universities and into the real economy.

Knowledge exchange (KE) is measured in KEF, research impact is assessed in REF, and the government puts KE at the heart of moonshots, clusters, and every conceivable variation of innovation strategies.

Everybody anywhere near research policy recognises KE is a good thing. The problem is that it is easier said than done and even then the name is already a bit of a mouthful.

From local impact, to league tables, to funding, to winning political favour, there are lots of reasons why universities encourage KE but there are also lots of reasons why academics might choose to do something else.


For some academics the core purpose of their work is to turn their research into products, processes, and ideas, that improve the prospects of their places and the profitability of businesses. There are a subset of these academics that might even become wealthy from spinning out their ideas into businesses.

There are then the academics promoted, remunerated, and made happy, by working on less applied areas. It may even be that their research has no financial impact or clear social application but it is instead focussed on that equally crucial endeavour of furthering the sum total knowledge of humankind. It is no less valuable work, it is just different.

There is then what I suspect is a big middle ground of people who are interested in knowledge exchange type work but either don’t have time, don’t have the contacts or support to do it, or are simply not incentivised by their institution in terms of promotions, impact or cash.

Squeezed middle

Although KE activity is often instigated by a lone researcher it is made infinitely easier and more impactful with organisational encouragement, accommodating local authorities and businesses, and clear routes to funding and support.

The government’s investment zone prospectus is an attempt to build exactly these conditions. The mechanisms on offer are reduced business rates, tax retention, investment incentives, and the ability to apply for additional measures that will encourage universities to work within their local area to bring investment through innovation.

There is a debate on whether the structure of the schemes are sensible. The success of enterprise zones is mixed with fewer employment benefits realised than promised. The prospectus talks about the early successes of freeports, which is debatable on its own terms, but a risk of investment zones and enterprise zones before them is that they displace existing activity rather than creating new investment.

Universities have been part of the conversations on setting up these zones. There is a whole piece to be written on the civic role of universities in arguing for specific fiscal and tax policies but there is an equally interesting debate on why universities would choose to be part of these schemes.

Getting to work

One motivation may be that universities will benefit from some capital investment. The UK is chronically short of lab space and there is a straightforward, but I think potentially transformative, investment to be made in using the capital incentives to open new high quality labs across the country. It would benefit universities, businesses, and encourage collaboration. It’s not glamorous or novel but the hard grind of levelling up through research policy isn’t glamorous or novel either.

When it comes to recurrent funding there is clearly a misalignment between a lot of research funding and notions of levelling up. The Nurse review leaves the door open for a radical departure from QR funding. There is clearly a tension between funding research on the basis of excellence, wherever it may be, and using research funding as a tool for levelling up even if there is not the same concentration of excellence. The reasons for this are of course deeply entwined with regional and research funding inequalities. There is a case to be made by local government and universities to provide specific research funding streams, perhaps through an organisation like Innovate UK, to encourage innovation with an investment zone.

There is also the opportunity to deploy funding for skills. In prose that makes the exciting seem mundane the prospectus states Investment Zones should support the work of the designated employer representative body responsible for the development and subsequent reviews of a Local Skills Improvement Plan, if relevant to their specified geographical area. In short, organisations should work together to help people develop new skills. Given that the Nurse review highlights the difficulties people have of moving between research organisations, innovation zones could be places for bringing together people from lots of organisations to work on new issues, work between organisations, and work together, in ways that do not seem to happen naturally at the moment.

There are lots of reasons to think that investment zones may not work but they will definitely fail if universities aren’t engaged in shaping their development. The role for universities is not to ensure that investment zones succeed at all costs but to give them the best chance of success in advocating for the financial, regulatory, and skills levers that will enable them to work with partners on a whole host of KE activities.

Devolved innovation funding doesn’t come around all that often. It may come around even less often without active engagement in the investment zone agenda.

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