The UK needs a German lesson in levelling up

According to my grandfather, it was a “little-known fact” that his home town of Reddish, Greater Manchester, was one of the healthiest places in the north of England. This, he explained, was the result of its being the direct recipient of refreshing sea breezes from Blackpool.

While my grandfather may not have had much idea of geography – he was blissfully unaware that any Blackpool breeze would pass through a slew of industrial towns, including the infamous Trafford Park industrial estate, before reaching the good people of Reddish – he had a very clear sense of place. This came from pride in a skilled job well done at Gorton Locomotive Works and having everything he wanted within 10 miles of his doorstep.

My grandfather’s “little-known fact” would scarcely have more credibility today. The polluting factories may have disappeared, but so too has the regional prosperity that came from being one of the workshops of the world. And it is a similar story in other post-industrial regions of the UK – not to mention the American rust belt, as set out in Times Higher Education in January.

Germany, too, once had a major problem of regional economic collapse and division. At the point of reunification, the GDP of the combined country was less than that of the UK, and its regional inequalities were greater. Today, the GDP hierarchy has reversed and Germany’s regional inequalities are significantly reduced.  

This transformation had two key ingredients: leadership and vision. The decision to “level up” the two Germanys by raising productivity and prosperity in the East came from the very apex of government. This one-nation policy was driven at scale and pace, investing an average of €70 billion (£60.5 billion) each year in infrastructure, education, skills, research and innovation.

Germany already had one significant advantage, however: its extensive, geographically distributed network of independent research organisations, which provide strong two-way connections between the science base and industry. The Helmholtz Association alone – whose mission is to “solve the grand challenges of science, society and industry” – has almost 36,000 employees in 18 research centres and an annual budget of about €3.8 billion, while Fraunhofer, which focuses on translational research, employs 23,000 people across a wide geographic spread of 74 institutions, with an annual research budget of €2 billion.

It is this infrastructure and ambition that are lacking in the UK. Our universities excel at fundamental research – look at our lead in developing the Covid vaccine – but are they the right agencies to solve the national productivity puzzle or to erase deeply entrenched regional inequalities?

The patchwork of Catapult centres, initiated by the 2010 Hauser report, looked to replicate the Fraunhofer centres and were developed along with an industrial strategy. They have had some success but are not equipped for German-style levelling up. Even the High Value Manufacturing Catapult, which comes closest in disseminating and applying technologies to raise productivity, struggles to convert industrial need into research questions and to transfer technology between the science base and industry. It has also had little impact on regional inequalities.

We know the government is looking at this. Ministers recognise that the UK system has two major fault lines. Academics are not incentivised to work on industrial projects nor to hold joint positions in industry and academia. Equally, industry is not adequately incentivised to work with the research base and lacks confidence that academia can deliver industrial solutions in a timely manner.

To address this, the UK should separate its R&D into three distinct but interconnected networks. Fundamental research should be carried out by the existing research base, including universities. Second, a repurposed Catapult network and a reformed research base should focus on development. Universities should embrace a strong civic role focused on advanced skills and knowledge transfer in regions, while the Catapults should be broken up into smaller units (say 200 staff each) and spread more widely and deeply into left-behind communities. Their clear remit would be to accelerate productivity improvements by introducing and integrating new but known technologies, such as robotics, automation and Industry 4.0, and also providing advanced skills training.

This leaves the missing ingredient: the translational link between fundamental research and commercial opportunities. This requires a light and agile new organisation that isn’t tied to one university but linked to all. Its explicit mission should be to exploit the £12.4 billion invested in the UK research base each year, accessing the best of the best, in industry and academe, to commercialise opportunities, drive step changes in productivity, develop new products and spin out companies.

This wouldn’t be the much-vaunted UK Arpa but an innovation agency that – as with the Oxford-AstraZeneca Covid vaccine – harnessed the experience and entrepreneurial vigour of the private sector alongside the deep talent of fundamental researchers to turbocharge innovation. It would connect anchor institutions, devolved combined authorities and local councils to implant new industries, breathe new life into old ones, and act as the catalyst for a network of innovation districts.

Such winds of innovative change – blowing through Blackpool, Reddish and everywhere else – are what we need to level up our disunited kingdom and recreate that pride in place that my grandfather knew.

Keith Ridgway is co-founder of the University of Sheffield Advanced Manufacturing Research Centre with Boeing (AMRC). He is executive chair of the National Manufacturing Institute Scotland and chair of Industry Wales. This article is co-written with John Yates, former head of external relations at the AMRC.