The UK Government is set to announce £86 billion in funding to boost British innovation in everything from new drug treatments and longer lasting batteries to AI breakthroughs, all in the hope of generating billions for the economy and driving growth.

The bumper funding package, worth more than £22.5 billion a year, comes ahead of next week’s Spending Review, where the Chancellor, Rachel Reeves, will lay out the Government’s intention to ‘turbo-boost’ the UK’s fastest growing sectors, including tech, life sciences, advanced manufacturing and defence, as part of the Modern Industrial Strategy.

The new R&D package will also mean local leaders have Government backing to develop ‘innovation clusters’ across the country, intended to unlock talent and opportunity in every region and nation.

Through the Local Innovation Partnerships Fund, local leaders will be given the powers to decide how to target research investment in their region and make the most of skills within communities, which the Government hopes will bring jobs and prosperity to all corners of the country.

The fund will give dedicated awards of at least £30 million to each of the seven established Mayoral Strategic Authorities, including Greater Manchester, West Midlands, South Yorkshire, West Yorkshire, Liverpool City Region, North East, and Greater London, as well as to one equivalent region in each of Scotland, Wales and Northern Ireland

“This investment backs regions to lead the way in the industries that will define the future,” said Richard Parker, mayor of the West Midlands.

“From life sciences and advanced manufacturing to clean energy and AI, regions across the UK have the skills and the ideas – they just need the investment and the power to match.

“This is exactly how we turn our potential into progress.”

Alongside this, nearly £5 million is being invested over three years to kickstart a new partnership between the high-growth regions of Manchester and Cambridge, strengthening the link between these innovation hubs to attract more business investment and pilot new approaches to collaboration.

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According to the Government, these investments in Britain’s future will deliver dividends for decades to come, with figures showing that every £1 invested in R&D generates up to £7 in economic benefits. 

The Government also claims that businesses receiving their first R&D grant funding see jobs and turnover increase by over 20% in the following years, with Labour aiming to build on the estimated 2.8 million people currently employed in occupations essential to R&D activities around the UK.

“Incredible and ambitious research goes on in every corner of our country, from Liverpool to Inverness, Swansea to Belfast, which is why empowering regions to harness local expertise and skills for all of our benefit is at the heart of this new funding – helping to deliver the economic growth at the centre of our Plan for Change,” said science and technology secretary, Peter Kyle.

The regional R&D funding package is the next step in the Government’s strategy to boost tech development across the UK, following plans for its ‘AI Growth Zones’ outlined earlier this year, when local authorities were encouraged to put their communities forward to become dedicated hotbeds for AI infrastructure development, and potentially attract millions in investment.

Since then, 200 local authorities with former industrial areas or land ripe for redevelopment have registered their interest in becoming an AI Growth Zone, with the first being confirmed in Culham, Oxfordshire.