Cities on a Re-invention Mission

CITIES On A re-invention
mission

_Sarah Wray explores why fostering an innovation economy presents huge opportunities for cities to reinvent themselves and set a path to sustainable prosperity.

This article featured in the print version of the
Connected Places Magazine

Author:
SARAH WRAY

As the nation adapts to a post-pandemic, post-Brexit world, increasing global competition, and rapid technology advances in areas such as artificial intelligence, the UK has set an ambition to be an innovation hub by 2035.

Innovative firms grow twice as fast as those that fail to innovate and have wider effects on economic and social wellbeing. With 62% of all new businesses registered in cities, it is in urban areas where these ambitions will become a reality.

“Cities are where we have our scale,” says Stephen Jones, Director of Core Cities UK, an alliance of 11 major UK cities outside London. “From the research through to idea development and implementation, cities are perfectly placed to be at the heart of innovation.”

Cities are home to major universities, which are essential to innovation. Cities are also places where communities, businesses and others come together and enable both the idiosyncratic connections and structured conversations that innovation needs to thrive.

If social outcomes could mirror those in London, this would lift 250,000 people out of unemployment, 1.2 million out of poverty and increase healthy life expectancy by up to eight years.

Following de-industrialisation and the shift to a service-based economy, which concentrated economic output in London and the south-east, cities also need to harness innovation to chart their own futures.

Productivity within key sectors in major UK cities outside London is largely lower than the national average. These cities also fall behind when it comes to diversity of industries, which is key to resilience.

“Cities are lynchpins of wider innovation too”, says Marvin Rees, former Mayor of Bristol and former co-chair of Core Cities UK. “Cities will not be islands of innovation. UK cities provide us with global connectivity, as places to innovate, and could be better described as innovative nodes within the flow of global innovation.”

“We should also think hard about how we approach this,” he adds. “The opportunity to be an innovation node is not specific to tech. We also need social innovations, that bring inclusive, stable and resilient societies and democracies.”

Curating Innovation

This highlights how without a purposeful strategy, growth can lead to inequity in cities.

As Mariana Mazzucato, founding director of the UCL Institute for Innovation and Public Purpose, puts it in an opinion piece for Project Syndicate: “Putting growth at the centre of economic policymaking is a mistake. While important, growth in the abstract is not a coherent goal or mission.

“Before committing to particular targets, governments should focus on the economy’s direction. After all, what good is a high growth rate if achieving it requires poor working conditions or an expanding fossil fuel industry?”

She notes that governments have been most successful in catalysing growth when they have been pursuing other goals, such as NASA’s mission to land a man on the moon which yielded innovations in several sectors from aerospace to nutrition, that then went on to generate significant economic and commercial value.

A recent report from the UK Urban Futures Commission – a collaboration between the Royal Society for Arts, Manufacturers and Commerce (RSA), Core Cities UK and Lloyds Banking Group – says that bringing the UK’s core cities in line with their European peers has the potential to add £100 billion (around five percent) to GDP each year.

“The cities of tomorrow need to be regenerative,” says RSA Chief Executive, Andy Haldane, in the report. “That is to say, capable of replenishing natural and social capital every bit as much as economic and financial.”

If social outcomes could mirror those in London, this would lift 250,000 people out of unemployment, 1.2 million out of poverty and increase healthy life expectancy by up to eight years, according to  the report.

So how do we get there?

Experts have recommended practical ideas for cities to realise this future, through leadership, new funding models, and collaboration.

“One of the challenges of innovation is that while some of the levers are direct, most of them are indirect,” says Stephen Jones. “You have to create the right conditions for innovation to take place.”

The UK Urban Futures Commission calls on cities to form a City Coalition, made up of local government, business, universities and the community and to work with them to draw up long-term “local prosperity plans” defined in social, economic and ecological terms.

It also urges cities to put in place ‘new architecture’ for the delivery of these plans, such as a Cities Investment Hub to provide expert advice on investment projects, and Urban Wealth Funds – like those in Copenhagen and Hamburg – to manage and increase local revenues from public sector assets.

The Connected Places Catapult’s A Roadmap for Innovation-led Prosperity report series recommends that urban areas should “create a dedicated leadership resource” with existing or new staff to align the whole-city ecosystem around a shared vision and co-funded innovation programme.

Mobilising capital

Both reports stress the need to mobilise new sources of private capital, particularly in light of financial challenges.

According to the Local Government Association, amid an “inflationary storm”, councils in England face a funding gap of £4 billion over the next two years.

“The lion’s share of the financing of city regeneration can and should come from the private sector,” according to the Urban Futures Commission.

Practical ideas include establishing a ‘Cities Investment Compact’ with major financial institutions through which 5% of the assets of financial institutions are committed to local investments.

The Catapult outlines a role for Strategic Innovation Investment Frameworks which align public investment through a commitment to spend against an agreed strategy and business plan. The aim of the Framework would be to offer scale, stability and certainty for private and social investment in innovation based on local priorities.

A slice of the Strategic Innovation Investment Framework – such as 10% – could create a Catalytic Innovation Development Fund to focus on development finance for commercialisation and bringing products to market.

Connected Places Catapult also highlights the power of public procurement to drive innovation and investment – particularly through outcome-based programmes around areas such as public health, transport and net zero that have the potential to create new markets. The organisation urges cities to commit to channelling at least 5% of their annual spend on goods and services via innovation-friendly procedures.

“Places that use their spending power and their leadership roles effectively to stimulate innovation are positioned well to capture and to grow local skills and enterprise pools,”

Sam Markey, Ecosystem Director for Place Leadership at Connected Places Catapult

National support

There are also calls for more support at the national level, including a national innovation strategy with cities at its heart and a new statutory purpose for city councils that would place generating local prosperity on an equal footing to delivering core services. Other recommendations include an acceleration of devolved powers and more streamlined and flexible funding.

“Fiscal devolution is among the enablers that could bring UK cities in line with their counterparts,” comments Marvin Rees. “Devolution around tax could enable UK cities to develop long-term plans that transcend the electoral cycle and stretch 15 to 20 years into the future.”

He adds: “It’s important to recognise when local, city leaders are best placed to make decisions – and give them the authority and responsibility to do that through devolution. Long-term commitments from government, rather than short-term cycles of competitive funding, would provide the assurance that cities need to attract investment and develop local prosperity.”

Getting started

Some cities are already demonstrating the value of promoting innovation, with examples including Liverpool’s Knowledge Quarter and the Pandemic Institute, Birmingham’s Future City plan for 2040 and Sheffield’s Innovation District.

The Belfast Region City Deal is credited with unlocking £1 billion of “transformative co-investment” which is slated to deliver more than 20 ambitious projects and programmes and create up to 20,000 new jobs.

Belfast has also demonstrated procurement innovation, having run over 75 civic innovation challenges that have channelled £10 million of public funding through the programme and benefited 200 firms.

City-regions such as Greater Manchester and Liverpool have established innovation boards, and Glasgow City Region’s new Innovation Action Plan includes the creation of a roadmap to make it easier for key investors to review Glasgow’s assets.

Rees highlights the City Leap initiative, which is a partnership between Bristol City Council and Ameresco Ltd to accelerate green energy investment.

“City Leap will see nearly £500 million invested in a range of large infrastructure projects in its first five years,” he explains.

Meanwhile, Bristol’s One City Plan for 2050 shows an “innovative style of city governance” and “radical collaboration” with a “common vision and set of goals that are owned by a city-wide coalition of partners, not just the council.”

With examples such as these, the Catapult’s Sam Markey is optimistic about the future for innovation economies in cities, despite the challenges they face.

“There is real and inspiring leadership at local level,” he says. “There is a sense of collaboration and willingness to work across aisles and across organisations.

“We have an important opportunity with huge potential to transform the economic trajectory of our cities and the people who live in them.”

Innovation Imperatives