Business in Scotland is not making the most of the little innovation funding it receives, potentially hampering growth.

Research conducted by intellectual property services and R&D tax credit experts GovGrant has found that businesses in Scotland received just 5.22% of Innovate UK funding since 2004.

This is less than half the sum awarded to the East of England, South West or South East regions – and nearly five times less than London.

How is Innovate UK funding to businesses divided among UK regions?

Over 18 years, ‘the UK’s national innovation agency’ Innovate UK has awarded over £5.8 billion in funding to commercial entities. Scotland, Wales and Northern Ireland, the North West and the North East combined have received 21% of the funding awarded — £1.2 billion in total, equivalent to £69 million each year.

By comparison, London has received 24% of the total sum — £1.4 billion, equivalent to £79 million each year. The data raises questions about the allocation of UK innovation funding away from London and the South East, particularly at a time the government is promoting a ‘levelling up’ agenda.

What impact has Innovate UK investment had in Scotland?

Using key performance measures identified by GovGrant, research found that business in Scotland is struggling to realise the positive impacts of innovation investment.

Turnover
Post-Innovate UK investment, one-third (33%) of Scottish companies experience a positive impact on their turnover — the fifth-lowest of all UK regions. Yet, this is still over double the number for Northern Ireland, where only one in eight (13%) businesses see greater turnover after investment. The biggest impact on turnover is in the East Midlands, where 44% of companies enjoy increased turnover.

Net worth
Only around half (50%) of companies in Scotland increase their net worth following Innovate UK investment, placing Scotland 9^th out of 12 UK regions.

Employee numbers

Scotland also underperforms for the percentage of companies who experience a post-investment uptick in employee numbers, with just 28% of companies benefitting in this way. Northern Ireland comes bottom with 22%, while the North East leads, with 47% of companies there hiring more people after investment.

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Luke Hamm, CEO at GovGrant, said: “Scotland has a proud history of engineering and manufacturing, while esteemed higher education institutes help to position it at the forefront of UK innovation.

“It’s been immensely interesting to see the lid lifted on Innovate UK. Unfortunately, data shows Innovate UK funding coming into Scotland isn’t having the impact seen in other regions. This would be cause for concern for any investor, and calls into question whether investments are being effectively targeted on the opportunities present in the region.

“At a time of serious political and economic unrest, ‘levelling up’ is a policy that sees support across the country and from many who voted the current government into power. Unfortunately, levelling up has just become a buzzword used to score votes – instead of being an actionable, sensible and timely approach to regional development.”

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