The building blocks to more innovative cities

If the UK economy is going to recover from the worst recession in 80 years, as well as grow sustainably in the longer term, we desperately need to find new sources of growth.

For Britain’s cities this means harnessing the next wave of innovation led growth – this is likely to come from the digital and low carbon economy, businesses services, healthcare and the experience economy.

In our latest report for the Cities 2020 programme we argue that to be able to capitalise on these new sources of growth we need to make sure that we have the right building blocks, that is the right institutions and networks, on the ground right now.

We know that innovation – the successful commercialisation of new ideas – is the key driver of economic growth. We also know that cities are crucial; they are the places where innovation actually happens. Successful cities are ones which have developed innovation ecosystems where networks of firms, entrepreneurs, universities, government, and other institutions come together to create new products and services.

Yet cities around the UK are very different; they support different types of innovative firms and institutions. In the report we argue that we need a place-based innovation policy that recognises that not all cities are the same. For example, an economy rooted in knowledge-intensive services such as software or design will need a very a different set of policy responses compared to a city experiencing the worst economic decline.

The dissolution of the regional development agencies and subsequent centralisation of key functions around inward investment, business support and innovation is at odds with the government’s localism agenda. That is why we argue that where cities have identified a need – through a robust and realistic understanding of their innovation ecosystems – they should seek new powers and responsibilities to support local policy. We are also calling for the government to give LEPs an innovation fund to support local delivery.

But this also about a lot more than just calling for cities to seek new powers and new sources of funding. There is a lot that cities around the UK can start to do now to create the right conditions for innovative firms to flourish. A lot of this is actually about new, and smarter, ways of working, and this is what we are calling for in our report.

Cities need to use LEPs to put businesses in the driving seat of shaping, and delivering, local innovation policy. Local authorities need to use procurement policies to work with the private sector to develop and stimulate the market for new innovative products and services. Universities need to maximise their role as anchor institutions and their links with local businesses.