Spinout success: commercialising academic research

Research and teaching in UK universities is widely recognised to be among the best in the world.  In fact, the University of Oxford has topped the Times Higher Education World University Rankings 2020 for the fourth year in a row.

However, in November last year, venture capital firm Octopus Ventures published a new measure of UK universities’ success – the Entrepreneurial Impact Ranking.

Instead of focusing on traditional measures of success, such as research, teaching and citation impact, Octopus Ventures’ new index measures UK universities’ effectiveness at translating this research into commercial success via the creation of “quality, investor-ready spinout companies”.

The results are a little surprising – with Queen’s University Belfast reaching the top spot, ahead of big players such as the University of Cambridge and the University of Oxford.

In this blog post, we consider these findings in more detail, and discuss the potential to further capitalise on the potential of spinouts in the UK, and the key factors that underpin their success.

A brief history of spinouts

A university spinout has been defined by Octopus Ventures asa registered company set up to exploit intellectual property (IP) that has originated from within a university”.

In other words, it is a company that has been established based on ideas derived from a university’s research.  Often, former or current researchers are directly involved in the management team, and start-up funding is provided by the university (or one of its connected venture funds).

UK universities have been allowed to commercialise the results of their research since the mid-1980s. Between 2003 and 2018, approximately 3000 IP-based spinouts were created by UK universities.

Since 2010, there has been a notable increase in investment into university spinouts – both in terms of the number of deals achieved and the amount of money invested in university spinouts, from both private and public investment sources.

High rates of success

There is good reason for this increased investment – the survival rates of spinouts are high compared to other types of start up enterprise.  Research published in 2018 by law firm Anderson Law found that nine out of ten spinouts survive beyond five years.  By way of comparison, only two out of ten new enterprises survive beyond five years in the wider start-up environment.

Indeed, many spinouts not only survive, but thrive.  The UK has produced a large number of very successful spinouts – for example, Oxford Nanopore Technologies, a University of Oxford spin-out company that has gone on to reach a £1.5 billion valuation.  ARM Holdings is another example – a designer of smartphone chips, established by the University of Cambridge, and acquired by Japanese firm Softbank for £24 billion in 2018.

Unrealised opportunities

However, while the UK has seen a number of high profile spinout success stories, Octopus Ventures, argue that there is yet more untapped potential to be realised:

The UK has produced a host of successful university spinouts, but there are many unrealised opportunities that have been left in labs or got lost on their funding journey. These could be worth trillions of pounds to the UK economy.”

This potential is perhaps best illustrated by looking at the unrivalled success of many universities in the United States.  Take, for example, Massachusetts Institute of Technology (MIT).  MIT has been the genesis for around 26,000 spinout companies, with a combined annual company turnover of US$2 trillion.  This is a huge amount from one university – and is equivalent to around 65% of the UK’s entire annual GDP!  The resultant spinouts have also created in the region of 3.3 million jobs. MIT clearly illustrates the huge potential that exists to capitalise on universities’ research.

Index results

Back in the UK, this massive potential has yet to be realised.  Indeed, one of the key aims of the new Entrepreneurial Impact Ranking is to identify where this potential exists, and which universities are making notable progress towards capitalising on it.

The key data points included are:

  • total funding per university;
  • total spinouts created per university;
  • total disclosures per university;
  • total patents per university;
  • total sales from spinouts per university.

An interesting element of the index is that it is also adjusted to account for the total funding that a university receives.  This means that it is not dominated by Russell Group universities simply on the basis of them receiving the most funding.

Indeed, Queen’s University Belfast was ranked first – putting it ahead of both the University of Cambridge (2nd place) and the University of Oxford (9th place) in terms of its production of spinout companies and successful exits, relative to the total funding received.

Queen’s University Belfast, through QUBIS Ltd, the university’s commercialisation arm, has had a number of spinout successes, including KainosAndor Technology, and Fusion Antibodies, all of which have been listed on the London Stock Exchange.

In Scotland, the highest ranking university was the University of Dundee (6th), which has had a number of successful spinouts, including Platinum Informatics, which specialises in the provision of software to analyse ‘big data’.

What makes a successful spinout company?

As well as identifying the most effective universities in terms of spinouts, the Octopus Ventures report also looks at the shared success factors that have contributed to their effectiveness.

There are three key factors:

  • Funding – Access to early funding is essential to success. Universities that ranked highly in the index were ones that raised funds to help get ideas off the drawing board. As Simon King, a partner in Octopus Ventures states: “Universities that enable early-stage proof of concepts and prototyping by making early-stage funds available, either internally through their own funds or through collaborative schemes with other funds are more successful at creating spinouts.  That’s a key takeaway.”
  • Talent – the issue of talent is considered a ‘consistently challenging’ issue for spinouts.  There is a huge demand for the right skills, and spinouts are often viewed as being high-risk propositions compared to more established enterprises.  Other challenges include a lack of academics’ understanding of the business world, and limited incentives for them to engage in the commercial world in light of the pressure to ‘publish or perish’.
  • Collaboration – As well as university-industry collaboration, collaboration between different universities was a key factor in the creation of successful spinouts. Collaboration helps to increase both scale and capacity, whilst also helping to attract and retain top talent.

Future support for spinouts

Measuring the relative effectiveness of UK universities’ ability to commercialise their research provides a number of signposts for the future in regards to how best to support and further develop this potential.

This is increasingly important given the economic uncertainties surrounding Brexit and the availability of a number of European funding streams once the UK leaves the European Union.

The UK’s Industrial Strategy places a clear emphasis on academic entrepreneurialism as a driver of economic growth.  And in 2018, the UK Government launched the £100m Connecting Capability Fund to support university collaboration in research commercialisation.

Commercialising academic research is far more complex, risky and expensive than establishing a typical start-up.  But their potential contribution to the economy, and wider society, is huge.


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Shared Prosperity Fund – greater productivity and inclusivity for Scottish cities?

new bridge glasgow

There are many questions surrounding the UK’s departure from the European Union, not least on the future of funding.

In Scotland’s regions and cities, EU Structural Funds have provided significant additional funding to support economic development for many years. The current structural funds programme is worth about €10.7 billion to the United Kingdom and up to €872 million to Scotland across the seven-year budget period which ends in 2020. The Funds were originally created to help rebalance regional social and economic disparities. With regional inequality a dominant feature of the current economic landscape, and the potential of Brexit to further exacerbate this inequality, continued investment to address this is vital.

The UK Government has made no commitment to continue with the EU Structural Fund approach following exit from the EU and has instead proposed to introduce a domestic successor arrangement – the Shared Prosperity Fund (SPF). The objective of the SPF is to “tackle inequalities between communities by raising productivity, especially in those parts of our country whose economies are furthest behind.” This objective is widely welcomed. However, as yet there has been no formal consultation on the new Fund and no detail on how it will operate.

Nevertheless, it had been suggested in recent research from the Core Cities Group on Scottish cities that despite the significant contribution from Structural Funds over the years, the proposed SPF could be an opportunity for greater productivity and inclusivity.

Success of EU Structural Funding

The two major EU Structural Funds utilised in Scotland are the European Social Fund (ESF), focusing on skills and jobs, and the European Regional Development Fund (ERDF), which focuses on correcting regional imbalances.

Over £134m per annum is being invested in economic development in Scotland through these funds over the current programming period, which is supported by a significant amount of match funding, largely from the public sector. According to the Scottish Government, the total funding will be around €1.9 billion.

The Scottish Cities – the collaboration of Scotland’s seven cities (Aberdeen, Dundee, Edinburgh, Glasgow, Inverness Perth, and Stirling) – and city regions have already successfully invested in each of the four Scottish Economic Strategy priorities (innovation, investment, inclusive growth and internationalisation) and the UK Industrial Strategy’s five foundations of productivity (ideas, people, infrastructure, business environment and place).

Some examples of projects include:

Research suggests that the ending of such funding poses a risk to organisations and the positive economic impact gained, as illustrated by reductions in funding in other areas of the UK.

Limitations

Despite the successes that have been achieved through the use of Structural Funds, the approach is not without its limitations. As argued by the Core Cities report, the approach to managing, overseeing and using the funding has become more bureaucratic and cumbersome. Particular issues highlighted include:

  • increasing centralisation of funding and decision-making;
  • the requirement to provide match-funding at an individual project level becoming increasingly problematic due to public sector budget cuts;
  • monitoring, compliance and audit requirements have become increasingly onerous;
  • in the current programme period, the role of the Managing Authority has become more transactional, with little engagement at the project development stage;
  • eligibility rules restrict what can be funded, with some important elements of economic development no longer able to be supported e.g. new commercial premises, transport infrastructure, which can limit the benefits from other Structural Fund investment (such as business growth and employment creation on strategic sites);
  • the system does not encourage innovation, with high levels of risk aversion amongst programme managers, and a high degree of risk for project sponsors if project delivery does not proceed as planned – a particular issue for projects working with the most disadvantaged groups and those with complex needs.

The report argues that these factors have had the effect of limiting the achievements of the Funds, such as preventing some organisations from applying for funding, which in turn has made others wary about applying. This has led to projects being designed to meet the funding criteria rather than maximising benefits, resulting in too much time and effort on administrative activities rather than those which will have an impact on the economy.

As such, it is suggested that the introduction of the SPF affords an opportunity to change this.

Opportunity for change

According to the report, there is an opportunity to move away from the limitations of the Structural Fund programme approach to more effective arrangements that will increase productivity and contribute to a more inclusive economy. There is scope to increase the funding available through the SPF, reduce bureaucracy and become more responsive to local need.

It is suggested that there is potential for SPF investment in the Scottish Cities to deliver an economic dividend of up to £9bn as productivity increases, producing higher wages at all levels in the workforce, and contributing to a more inclusive economy overall.

Given that Scotland’s performance on some of the key economic indicators is likely to be taken into account when allocating SPF – GVA per job and per hour worked, employment rate, deprivation levels – the report also contends that there is a case for a greater share of the SPF for Scottish Cities. It argues that significant SPF investment in these areas “…will increase competitiveness and tackle inequality, as set out in Scotland’s Economic Strategy, as well as contributing towards the objectives of the UK’s Industrial Strategy, raising productivity and reducing inequalities between communities”.

The report warns that “Scotland will not make significant progress towards a more inclusive economy and society without addressing the deprivation challenges in the Scottish Cities.”

It is recommended that:

  • the SPF should use a transparent, needs-based allocation system;
  • the SPF budget should not be determined by previous levels of Structural Funds, and should be significantly increased; and
  • the Scottish Cities must be closely involved in the design of the SPF.

Final thoughts

There appears to be wide consensus for providing a replacement for EU Structural funding. Most organisations that have commented on the proposed SPF also agree that the level of funding should at least be maintained at its current level.

The concerns in Scotland, and indeed the other devolved legislatures, is the impact the SPF might have in devolved decision making powers currently exercised under EU Structural Funding.

The Scottish Cities have made clear their views on the proposed SPF and the Scottish Government has also launched its own consultation on how the Fund might work for Scotland.

Only time will tell whether the UK Government will take these comments on board, and indeed whether the opportunity for change will be realised at all.


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Former Universities Minister sets out plan to increase R&D funding in the UK

The relationship between the Government, the private sector and universities in promoting R&D and the commercialisation of research is explored in a new report by former Universities Minister and Visiting Professor at King’s College London, David Willetts.

The report, published by The Policy Institute at King’s College London, sets out his personal view of the current state of research funding policy. While welcoming cross-party plans to raise R&D spending from 1.7% of the UK’s GDP to 2.4%, the report proposes a series of measures and guiding principles that would help Government to both achieve this ambition and further strengthen the UK’s research sector.

Boosting R&D funding

The plan identifies priority areas of additional funding, in particular the need for a ‘substantial increase’ in the core budgets of the Research Councils, covering a wide range of disciplines.

However, the report goes further and suggests that the current political consensus regarding the need for more funding for R&D should also be used to tackle some of the nation’s biggest and longest-running research challenges, particularly applying and commercialising research. Overall, the system should be well-balanced between the pursuit of fundamental understanding and of usefulness.

Willetts argues that some of the UK’s problems in applying research (in comparison to other countries) arise because much more of our research is conducted in universities where the incentives work against successful commercialisation. This includes the emphasis on academic publication as a measure of performance.

At the core of the report is a 12-point plan designed to boost British science and technology and ultimately attain more value from it.

University research:

  • Fund the full economic cost of a research project instead of the current 80%.
  • Announce that counting start-ups is no measure of a university’s performance in promoting innovation.
  • Discourage universities from going for such big stakes in companies created by their academic staff, which is currently a barrier to private investment.
  • Remove the requirement that all eligible researchers should be submitted to the Research Excellence Framework – to boost practical applied research and cut bureaucracy in academies.

Non-university research

  • Create a pot of public funding to support catapults, technology parks and other non-university institutes.
  • Restore greater freedoms to public research establishments.

Key technologies

  • Immediately launch government investment in key technologies.
  • Create a new technology strategy based on expert horizon scanning for new technologies.

Business

  • Boost Innovate UK’s SMART awards budget by around £300 million a year.
  • Better align bodies such as Innovate UK, the British Business Bank and Business Growth Fund so that new technology companies can access funding schemes more easily.
  • Insist that 1% of public procurement budgets for large infrastructure programmes is used to promote innovation.
  • Simplify Research Council grant processes and speed up how UKRI investments are reviewed and approved.

A strategic approach to innovation

The report also examines Conservative Party proposals to introduce a British version of the American DARPA (Defense Advanced Research Projects Agency). The history of ARPA/DARPA in the US has been characterised by an approach which is free from the constraints of peer review and more able to support risky projects with a significant chance of failure. The report outlines how such a body might work in the UK, and states that lessons could be learned from how confidently US funders track and invest in technology compared with a relative lack of confidence and doubts about the UK’s capabilities that exists within the UK.

Promoting the UK’s research community

Launching the report David Willetts said: “These proposals are intended to promote one of Britain’s greatest single intellectual and cultural achievements – the vigour and creativeness of our research community. From producing Nobel Prize winners to supporting technicians maintaining and developing the kit which makes their discoveries possible, excellent R&D underpins Britain’s distinctive and wide-ranging research base. But we need to ensure extra funding is well-spent, enabling us to harness research to create wealth and prosperity to boost our living standards in the future. This 12-point plan shows how we could achieve that.”


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Diversity and precarity: a conference on Scotland’s places of creative production

It might come as a surprise to learn that Scotland’s creative industries make up the country’s second biggest growth sector, after energy. But as well as making significant economic contributions, the creative sector is important on its own terms, with practitioners deploying their imagination, skills and expertise in a wide variety of sub sectors, from architecture and advertising to design and music.

Last month, The Glasgow School of Art (GSA) hosted a conference focusing on the ambitions of Scotland’s creative community. The organisers chose the perfect setting for the conference: for the past 20 years The Lighthouse in Glasgow has been a beacon for Scotland’s creative industries. As well as serving as Scotland’s architecture and design centre, the building has a direct connection to one of Glasgow’s cultural heroes. Designed in 1895 for the Glasgow Herald, The Lighthouse was the first public commission for Charles Rennie Mackintosh.

Scotland’s creative community has a lot to be proud of, but as well as acknowledging success stories in television, computer games and the visual arts, the conference also addressed the shadows that threaten to undermine Scotland’s creative sector.

Defining design and the challenges of precarity

One of these issues was raised by Janice Kirkpatrick, founding director of Graven, one of Scotland’s most successful design studios. Janice observed that the creative community’s difficulty in defining creativity has made it hard to communicate its work to the wider world. This is important, especially when trying to attract young people into the sector. She noted that in England between 2000 and 2018 there was a 79% fall in the number of people studying design. The situation in Scotland isn’t quite as bleak, with a 16% increase in design students. But Janice argued that there is a need to introduce children to art and design at a much earlier stage in their lives so that they can regard the creative sector as a serious career option.

Katrina Brown, founding director of The Common Guild, agreed that schools have a vital role to play in nurturing an affinity for and awareness of the arts. She observed that other countries have adopted a different approach, noting that a friend living in France had complained that their daughter’s school organised visits to art galleries just once a month.

The Common Guild is a dynamic visual arts organisation in Glasgow, and Katrina referenced her experiences to highlight the precarity of the sector. The arts have not been immune to the impact of austerity following the global economic crisis. Galleries have closed, programming has been reduced, and opportunities for artists, invigilators, educators and technicians have shrunk. This matters, Katrina argued, not only because the arts have such positive economic effects, but they also enrich our health, wellbeing and quality of life.

Despite the harsh economic climate, many public bodies recognise the value of the arts, and Katrina offered the example of Dundee Contemporary Arts (DCA), which has become a world class centre for contemporary art and culture. The University of Dundee has demonstrated the importance of supporting the cultural life of the city by investing in DCA, which supports individuals in their artistic endeavours, but also provides them with an income through jobs in the centre’s café and cinema.

Place makers: Glasgow’s Meanwhile Spaces

The conference’s title – Places of Creative Production – took on a special resonance during a presentation by Richard Watson, Commercial Lead at City Property Glasgow, a subsidiary of Glasgow City Council. Like many UK cities, Glasgow’s city centre has been struggling to cope with the impact of online shopping and out-of-town retail centres. Closures have hit the city harder than any other in Scotland, with an alarming rise in the number of vacant properties. In response to these challenges, City Property Glasgow has been working with the council and other agencies to create ‘Meanwhile Spaces’ from empty shops in the city’s High Street and Saltmarket. After being made structurally safe and ready for new tenants, a new leasing strategy was developed, offering the properties for one year, rent-free (all other service, utility and business rates charges still apply).

Since June of this year, the first Meanwhile Space tenants have been moving in, and many of these are members of the Scotland’s creative community, including:

SOGO: a Scottish based bi-annual lifestyle and arts magazine, which promotes and provides a platform for Scottish creative industries and communities.

WASPS: the UK’s largest non-profit studio provider for artists, which will use a Meanwhile Space to support activities in which creators can prosper.

SALTSPACE: a new co-op launched by students and graduates from Glasgow School of Art to support young creatives in their transition from art school into professional practice.

Although the project is still at an early stage, Richard explained that the response of tenants and local residents has been positive, and City Property Glasgow is already working on plans to create Meanwhile Spaces in other parts of the city, and to develop longer-term spaces.

The conference heard a variety of voices and experiences, giving participants the opportunity to learn about a rich diversity of creative activities in Scotland and beyond:

  • Professor Andrew Brewerton from Plymouth College of Art, described the establishment of a free school specialising in the creative arts;
  • Video games artist and lecturer Andrew Macdonald compared his experience of working in Sweden’s games industry with the games sector in Scotland;
  • Writer and broadcaster Stuart Cosgrove explained the approach taken by the Glasgow team in forming a successful bid to become one of Channel 4’s creative hubs.

Forward thinking

Closing the conference, Professor Irene McAra-McWilliam, Director of The Glasgow School of Art, said that the GSA would be happy to organise further events that might build on the ideas arising from the day’s conversations. And she reminded participants that although Scotland’s creative community faces significant challenges, it also has the skills, experience and passion needed to meet them.


Further reading from The Knowledge Exchange blog on culture and creativity:

How well is your economy? Moving beyond GDP as an indicator of success

by Scott Faulds

Since the early 20th century, the predominant method of evaluating the success of a country has been through the metric of Gross Domestic Production (GDP). This measurement is based upon the assumption that economic growth is the key indicator of a successful country.

In recent years, this assumption has been challenged, with politicians and economists, arguing that the focus on GDP has led to the development of policy which values economic growth at the expense of the wellbeing of society.

Following the 2018 OECD World Forum, Scotland, Iceland and New Zealand, have formed a group known as the Wellbeing Economy Governments, to share best practice of how to build an economic strategy that will foster societal wellbeing.  Additionally, organisations such as the OECD, European Commission and United Nations, are all conducting research into the development of policy beyond GDP. Therefore, it is clear that the previously held consensus surrounding the use of GDP has begun to break down, with countries across the world searching for different ways to evaluate the success of policy.

We must forge ahead with progressive economic policies that defy common stereotypes about costs and benefits and keep on promoting gender equality as part of a forward-looking social justice agenda

Katrín Jakobsdóttir
Prime Minister of Iceland

 

What’s wrong with GDP?

According to the International Monetary Fund (IMF), GDP is the measurement of the monetary value of all final goods and services produced within a country during a given period. However, it should be noted that this measure excludes unpaid work and the economic activity of the black market. Simon Kutzents, the modern-day creator of GDP, argued that whilst GDP was effective as a measure of productivity, it should have never been used as an indicator of the welfare of a nation.

Critics of GDP contend that the measure is overly simplistic, due to its interpretation of a successful country as one which is experiencing economic growth, arguing that some countries with growing economies have many social problems. For example, in China GDP grew by 6.6% last year whilst levels of inequality rose faster than in other countries, and society faces a great deal of political oppression. Therefore, it can be said that GDP does not provide a true picture of the success of a country, as it fails to consider societal problems, such as inequality and political freedom.  

The wellbeing approach

As a result of growing criticism of the use of GDP, several countries have started to look at alternative approaches of measuring success which considers factors beyond economic growth. This has led to international interest around the concept of wellbeing, a desire to create policy to improve the wellness of society.

This can manifest in a variety of different forms, from Scotland’s National Performance Framework to New Zealand’s Wellbeing Budget –  both policies designed to help improve the health of society rather than solely increasing economic growth.

However, this should not be interpreted as a movement away from encouraging businesses to grow; rather the Wellbeing Economy Governments believe that by improving the wellbeing of society they will indirectly stimulate sustainable economic growth.

“We need to address the societal well-being of our nation, not just the economic well-being

Jacinda Ardern
Prime Minister of New Zealand

As a result of creating a budget justified by improvements in societal wellbeing, New Zealand has invested record levels of funding into supporting the mental wellbeing of all citizens, with a special focus on under 24s. Additionally, the budget prioritises measures to reduce child poverty, reduce inequality for Māori and Pacific Islanders and enable a just transition to a sustainable and low-emissions economy. New Zealand believes that by tackling these inequalities, economic growth can be stimulated in ways that benefit all New Zealanders, where improvements in mental health alone could lead to an increase in GDP of 5%.

Therefore, whilst GDP isn’t the main priority of policy making under the wellbeing approach, it is possible for economic growth to occur as a result of implementing policy designed to improve the wellbeing of society. After all, according to the World Health Organisation, a healthier and happier society is a more productive society.

How well is well?

It is evident that the use of GDP as a measure of a country’s success has faced a great deal of criticism in recent years. However, some economists are not ready to give up on GDP quite yet. They argue that whilst GDP is not a perfect representation of a country’s success, neither is the wellbeing approach as it can be incredibly difficult to quantify societal wellness.

For example, if we compare one citizen who is in poor health and lives in an area experiencing low-levels of crime with another citizen who is healthy and lives in an area with high-levels of crime, how can we quantify which citizen has the better level of wellbeing?

In short, critics of the wellbeing approach argue that whilst it is vital that society’s wellbeing is considered during the policy-making process, basing policy solely around wellbeing is ineffective and would be incredibly difficult to measure, due to the personal nature of what constitutes wellbeing.

“Growth in GDP should not be pursued at any or all cost … the objective of economic policy should be collective well-being: how happy and healthy a population is, not just how wealthy a population is.”

Nicola Sturgeon
First Minister of Scotland

Final Thoughts

In summary, whilst there is a great deal of international interest in the possibility of a movement away from GDP, no consensus has yet formed as to whether the wellbeing approach is the way forward. With all new forms of policy, other countries often wait to see if early adopters succeed before following their lead. Perhaps it will be left up to smaller countries to prove that an economic policy focused on wellbeing can be successful.

Until then expect to see a great deal of interest in New Zealand’s implementation of the Wellbeing Budget and the results of the second meeting of the Wellbeing Economy Governments in Iceland this autumn.


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A rising tide: the growing importance of the blue economy

Wild Surf

There has been much focus on the green economy in recent times as the international community attempts to address the current ‘climate emergency’. According to the United Nations (UN), “an inclusive green economy is one that improves human well-being and builds social equity while reducing environmental risks and scarcities.” Over the past decade, many governments have highlighted the green economy as a strategic priority, and since the Intergovernmental Panel on Climate Change (IPCC) published its special report on the impacts of global warming of 1.5 °C in 2018, action has been stepped up across the globe.

However, green economy strategies tend to focus on the sectors of energy, transport, agriculture and forestry, which leaves out an important part of the world’s environment – the oceans. It has been argued that “a worldwide transition to a low-carbon, resource-efficient green economy will not be possible unless the seas and oceans are a key part of these urgently needed transformations”.

Perhaps unsurprisingly then, a new buzzword in the international sustainability agenda is gaining momentum – the ‘blue economy’. Since the turn of the 21st Century, there has been an increasing commitment to growing the blue economy but what exactly is it and why is it important?

What is the blue economy?

Similarly to the green economy, there is no internationally agreed definition of the blue economy. Its origins stem from the Rio+20 outcomes whereby member states of the UN pledged to ‘protect, and restore, the health, productivity and resilience of oceans and marine ecosystems, to maintain their biodiversity, enabling their conservation and sustainable use for present and future generations.’

It is further explained through the UN General Assembly support for Sustainable Development Goal 14: ‘Conserve and sustainably use the oceans, seas and marine resources for sustainable development’ as set out in the UN’s 2030 agenda for sustainable development.

Various definitions have been used by different agencies.

According to the World Bank, the blue economy is the “sustainable use of ocean resources for economic growth, improved livelihoods and jobs, and ocean ecosystem health.”

Conservation International has suggested that, “at its simplest, ‘blue economy’ refers to the range of economic uses of ocean and coastal resources — such as energy, shipping, fisheries, aquaculture, mining, and tourism. It also includes economic benefits that may not be marketed, such as carbon storage, coastal protection, cultural values and biodiversity.”

Like the green economy, the blue economy model aims for improvement of human wellbeing and social equity, while significantly reducing environmental risks and ecological scarcities.

Why the blue economy is so important?

Clearly, ocean health is vital to the blue economy. With over 70% of the world’s surface covered by ocean, almost half of the world’s population living in close proximity to the sea, the majority of all large cities being located along the coast and 90% of global economic trade travelling by sea, it is not difficult to see why the ocean and its resources are seen as increasingly important for both sustainable and economic development.

It is also a source of food, jobs and water, and contributes to the protection of the environment by absorbing carbon dioxide emissions. It has been estimated that the global blue economy has an annual turnover of between US$3 and 6 trillion and is expected to double by 2030. It is also estimated that fisheries and aquaculture contribute $US100 billion annually and about 260 million jobs to the global economy. In addition, over 3 billion people around the world, mostly from developing countries, rely on the world’s oceans and seas for their livelihood.

It is therefore not surprising that ocean pollution and the threat to marine resources have ascended the sustainability agenda in recent years, attracting increasing global attention and high-profile interest.

Sir David Attenborough’s popular Blue Planet II series highlighted the devastating impact pollution is having on the world’s oceans. It led to drastic behaviour change – 88% of people who watched the programme reported having changed their behaviour as a result, with half saying they had “drastically changed” their behaviour, and half saying they had “somewhat changed” it.

The recently heightened concerns over climate change have also highlighted the importance of the blue economy. The IPCC report warned that coral reefs would decline by 70-90% with global warming of 1.5°C, whereas virtually all (> 99%) would be lost with 2ºC.

Momentum building

Governments and organisations from across the world have been taking action to address the climate emergency with many strengthening commitments to growing the blue economy in particular.

The first ever global conference on the sustainable blue economy was held last year. It concluded with hundreds of pledges to advance a sustainable blue economy, including 62 commitments related to: marine protection; plastics and waste management; maritime safety and security; fisheries development; financing; infrastructure; biodiversity and climate change; technical assistance and capacity building; private sector support; and partnerships.

A new High Level Panel for a Sustainable Ocean Economy was also established in September, the first time serving heads of government have joined forces on a global pact to protect the world’s oceans.

The UN’s Decade for Ocean Science (2021-2030) will also soon be upon us and the World Trade Organisation has been tasked with ending harmful fisheries subsidies by 2020. New approaches are also helping countries value their small-scale fisheries. Scotland’s economic action plan, for example, makes a specific commitment to grow the blue economy which includes a new, world-leading approach to fisheries management with a focus on inclusive economic growth.

Way forward

The increasing awareness of the blue economy and the threats it currently faces provide an opportunity to change things for the better. As the global conference on the sustainable blue economy suggested, a sustainable blue economy strategy needs to be people-centric with ocean-centric investments. If momentum keeps building towards growing the blue economy across the globe, perhaps this will go some way to mitigating the global climate emergency bringing benefits for all.


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Beneath the headlines: record high employment rate, but what’s more important – quantity or quality?

Competition for new jobs

The UK employment rate has hit a joint record high of 76.1%, according to the latest official figures. The unemployment rate was estimated at 3.8%; it has not been lower since 1974. The economic inactivity rate was also close to a record low.

It’s not surprising that such record figures are often highlighted as ‘good news’ headlines. However, there has also been an increasing focus on quality of work over the past decade and the impact this has on people’s lives – reflecting concerns regarding developments in working practices, as highlighted by a recent City-REDI briefing paper. It has therefore been argued that the record employment rates are not necessarily representative of a ‘good news’ story.

Concerns

Concerns over working practices include the rise of the gig economy, unequal gains from flexible working, job insecurity and wage stagnation, to name but a few. The City-REDI paper outlines a number of ongoing concerns related to:

  • weak productivity growth;
  • employment insecurity and precarity;
  • in-work poverty;
  • skills shortages and skills polarisation; and
  • the impact of automation, technological change and the gig economy on the nature and experience of work.

Indeed, analysis has shown that much of the recent rise in employment is due to a ‘surge in low-value work’, which is holding back productivity growth. Many people are stuck in low paid insecure work, all of whom are contributing to the high employment rate.

Recent research from the Joseph Rowntree Foundation has reported that four million workers live in poverty, a rise of over half a million over five years – meaning in-work poverty has been rising even faster than employment. The causes of this increase include poorly paid jobs – particularly under temporary and part-time contracts – and a lack of progression routes for people in low-skilled work.

In addition, the rising gig economy shows no signs of slowing down, more than doubling in size over the past three years and now accounting for 4.7 million workers, according to a new report. An interesting finding of the report is that the majority of gig economy workers use this platform to supplement other forms of income, suggesting that workers are not getting enough of an income from their primary employment.

It has also been shown that advances in technology have pushed some workers into poorer quality jobs than those lost, something which cannot be addressed without some kind of policy intervention.

Health impact

Not only is poor quality work bad for the economy, it is also bad for people’s health.

A recent report which examined the impact on social inequalities of policy initiatives and reforms to extend working lives in five European countries, highlighted that working conditions are also known to influence post-retirement health, and for those with lower socioeconomic status, workplace arrangements may be causing or contributing to poor health.

A number of studies have highlighted the link between good work and health and wellbeing. As stated by a What Works for Wellbeing briefing paper, “Being in a job is good for wellbeing. Being in a ‘high quality’ job is even better for us.” It has also even been suggested that being in a poor quality job is actually worse for health and wellbeing than remaining unemployed.

Moves towards improving quality

Recent developments in the UK to address such challenges for the future and quality of work include:

  • the establishment of The Work Foundation’s Commission on Good Work in 2016, which aims to better understand the factors shaping change, and the nature and scale of opportunities and risks, so as to promote policies to achieve ‘good work’;
  • The commissioning and publication of the independent Taylor Review of Modern Working Practices in 2017 which called for policy to address the wider issue of creating quality jobs for all; and
  • the Government’s Good Work Plan, published in December 2018, which sets out the reforms planned to help improve quality of work – the first time the UK Government placed equal emphasis on the quality and quantity of work.

In addition, the Chartered Institute of Personnel and Development (CIPD) launched the UK Working Lives survey, the first robust measurement of job quality in the UK. This has since contributed to government thinking and recommendations around ‘good work’ in response to the Taylor Review.

Despite the widespread agreement over the need to adopt ‘good work’ principles, however, there remains no agreed set of indicators of exactly what it encompasses nor metrics for measuring progress towards it.

What is good work?

As the City-REDI briefing paper and other studies indicate, defining good quality work is complex as quality means different things to different people.

A range of factors contribute to different people’s perception of quality and fulfilling work, including pay, flexibility, security, health and wellbeing, nature of work and job design. The CIPD survey highlights seven dimensions of job quality:

  • pay and benefits
  • employment contacts
  • job design and nature of work
  • work-life balance
  • work relationships
  • voice and representation
  • health and wellbeing

Of course, there is no one size fits all solution.

Final thoughts

While productivity and employment rates undoubtedly remain important, they alone are clearly not enough to understand the health of the labour market; the quality of work also needs to be considered.

As shown by the visible shift from quantity to quality of work in recent years and the recent developments from the government and others, ‘good work’ is undeniably on the policy agenda. However, as the City-REDI paper suggests, there should be a focus on promoting ‘good work’ amongst the most disadvantaged groups such as the young, people with disabilities and those working in hotels and restaurants. It is also suggested that there is scope for further research on good practice in promoting ‘good work’ in establishments of different sizes and in different sectors.

As highlighted in the Taylor Review, “All work should be fair and decent with realistic scope for development and fulfilment.


You may also be interested in some of our previous employment-related posts:

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How can the UK Government support our rural entrepreneurs?

Rural Wales, house by a river

By Steven McGinty

Rural businesses play a significant role in the UK economy. Yet, policymakers often overlook their contribution and, as such, have failed to realise the economic opportunities in many of our rural areas.

Last year, University of Essex researcher Anupriya Misra presented an insightful webinar (register to hear a recording of the webinar) outlining some of the key challenges facing rural entrepreneurs, as well as the likely drivers of growth.

The make-up of the rural economy

Research by the House of Lords Library shows that the rural economy accounts for approximately 20% of England’s total economic activity, an estimated £229 billion.

Unsurprisingly, one of the key differences between city and rural economies is the size of the agriculture, forestry, and fishing sectors. In England, they amount to 2% of the Gross Value Added (GVA) of the rural economy. However, in rural areas classed as ‘sparsely populated’ this figure significantly increases, with these industries accounting for 32% of registered local businesses.

In Scotland and Northern Ireland, agriculture, forestry, and fishing play a more prominent role in the rural economy. In Scotland, 13 out of its 32 local authorities have more than 50% of their population living in rural areas, with these councils contributing 20.6% of Scotland’s GVA. In Northern Ireland, 25% of VAT registered businesses are involved in agriculture, forestry, and fishing, and outside of Belfast, it’s the largest industry in each local authority area.

The challenges for rural entrepreneurs

Many rural businesses have a strong entrepreneurial spirit, and the products they sell make up a significant proportion of UK exports. For example, 25% of Britain’s goods exporters are registered in rural areas. Nevertheless, these rural entrepreneurs can face barriers their counterparts living in cities are far less likely to experience. This includes:

  • Slow broadband – Online rural businesses can be particularly affected by slow broadband speeds. In addition, businesses involved in the tourism industry are affected, as free wi-fi is becoming an increasingly important part of the visitor experience.
  • Skills shortages – Rural businesses in sparsely populated areas can struggle to recruit the right staff, and their existing staff can experience challenges accessing training and development opportunities.
  • Poor transport infrastructure – Poor infrastructure can make it challenging for rural businesses to recruit, as well as connect to suppliers and customers in larger urban centres.
  • Difficulty accessing finance – Lower land values in rural areas can also limit a business’s ability to provide collateral for loans.

Why do some rural areas do better than others?

An interesting question raised by webinar presenter Anupriya Misra is why do some rural areas outperform others? In her view, a mixture of supply and demand factors impact on an area’s economic performance. For instance, having access to high skilled labour, good transport links to cities, beneficial planning laws, and business support are very important for supporting rural economic growth.

Additionally, rural areas which have a wealthy local population or have products with strong global demand are also likely to be high performing.

Business advice and networking

A key theme to emerge from the webinar was the important role business advice and networking plays for rural entrepreneurs. Fledgling rural businesses will often need a range of support, including help to develop their business management skills (such as basic accountancy skills), legal advice, as well as guidance on grant writing and the funding opportunities available to them.

Entrepreneurs looking to grow their business, will need other forms of support, from help to develop an online marketing strategy to advice on providing great customer service. Informal networks, and opportunities to connect with other business owners, can also be an invaluable resource.

In 2012, the Department for Environment, Food and Rural Affairs (Defra) set up the Rural Growth Network (RGN) Pilot Initiative to help rural areas overcome the barriers they faced.  This included projects in Cumbria, Heart of the South West (HotSW), North East, Swindon and Wiltshire, and Warwickshire. In practice, this involved creating a network of ‘enterprise hubs’, offering rural businesses a mix of premises, business, and infrastructure support.

An evaluation of the initiative highlighted that introducing enterprise hubs brought several benefits to rural entrepreneurs. 70% of start-up founders surveyed reported an improvement in their business skills and half reported that they improved their networking with other firms. In financial terms, the net economic impact of the RGN pilots, in terms of Gross Value Added (GVA), was estimated to be around £16.5 million, with £56.6 million expected over a further three years. And, for every £1 invested by Defra, £1.50 was created in net GVA.

Researcher Anupriya Misra concluded the seminar by suggesting that the rural economy could be improved by following Defra’s evidence and creating a new network of rural enterprise hubs, which provide business skills and support that meets the needs of local communities.


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You may also be interested in Research Online, a valuable resource for research and analysis, covering topics such as entrepreneurship, employment, learning and skills, and careers education. 

UK slipping to third place in international higher education – are UK universities losing their competitive edge?

Two guys taking a selfie at graduation.

By Steven McGinty

Last year, Professor Simon Marginson published a report that would have worried university chiefs more than a BBC investigation into their eye-watering salaries.

The concern? That UK universities are no longer able to compete with the world’s elite universities and have slipped from second to third in the international higher education rankings.

The Marginson report

For many years, the UK has sat comfortably behind the United States as the second most popular destination for international students.

However, Professor Marginson’s analysis of the data shows that since 2012 there has been moderate growth in the numbers studying at British universities. Interestingly, this is also the year the UK Government cancelled the post-study work visa, which allowed non-EU students to stay and work in the UK for up to two years after graduation, and replaced it with the right to stay for four months after graduation.

In contrast, the research shows Australia has seen a surge of international students studying at their universities, rising from 249,868 in 2012 to 335,512 in 2016. This is still fewer than were studying in the UK in 2015 (430,687). However, Australian government figures show that student numbers increased by 14.7% in 2017, with this high growth continuing into 2018.

And, Professor Marginson predicts that when the full data becomes available the UK will only be slightly ahead of Australia, or that Australia may have already climbed into second place. In either scenario – and with Brexit on the horizon – this news will be undoubtedly worrying for universities, who have a long tradition of welcoming students and academics from across the globe.

Times Higher Education (THE) World Reputation Rankings

Although UK universities are respected internationally, this is not the first piece of evidence to suggest international students might be tempted elsewhere.

In 2018, the Times Higher Education (THE) World Reputation Rankings, which scores universities based on the quality of their research and teaching, highlighted that British universities either stayed the same or fell down the international league table. In particular, Durham University has lost its place amongst the top 100 universities in the world, whilst University College London and Imperial College London have dropped down the rankings.

Phil Baty, THE’s editorial director of global rankings, argues that the UK’s elite universities cannot take their international reputation for granted and suggests the findings should “give pause for serious thought as the country seeks to champion its status as ‘global Britain’ in a post-Brexit world.”

The competition

Although recent immigration changes and uncertainty over Brexit present challenges for British universities, the policies adopted by other countries have also impacted on their competitiveness.

In the US, President Barak Obama’s liberal approach to immigration resulted in a 26% increase in international students between 2011-2015 – this is significantly higher than the UK’s 2.6% growth rate for the same period. However, more recently, President Trump’s ‘America First’ policy has led to the tightening of the student visa system and increasing anti-immigrant sentiment. In turn, the US has experienced a decline in international student numbers, particularly from Saudi Arabia, Mexico, and Canada.

Canadian universities have attempted to capitalise on these political changes by marketing themselves as a more tolerant North American alternative. For example, the University of Montreal has set up a travel fund to help international students attend US conferences, as some may face difficulties entering the country. Policies, such as these, are likely to have led to a 20% increase in international students accepting places in the Autumn of 2017.

In Australia, there has been a dramatic change in direction. In 2009, violence against Indian international students ignited protests in the streets of Melbourne and Sydney. In response, the Australian Government made a significant diplomatic effort to salvage Australia’s reputation as a welcoming place for international students, including by relaxing the regulatory and financial requirements for study.

How can the UK foster competitiveness?

Education Insight founder, Janet Ilieva, suggests that the UK Government should work with higher education institutions to coordinate their international marketing efforts, as well as provide post study work opportunities.

Similarly, Universities UK, have stressed the importance of bringing back work visas for overseas graduates. They highlight that competitors such as the United States and Canada allow students to stay and work for three years after graduating, and four in the case of Australia.

To mitigate against Brexit, the Economist has discovered that some universities are considering setting up a European campus in order to avoid immigration restrictions.

Policy reforms and practical support, such as those highlighted above, would certainly improve British universities’ ability to compete with up-and-coming international student destinations. However, the real question is, is there enough political will to make this happen?


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New year, new high street: it’s time to reshape our town centres (part two)

Dunfermline town centre

This is the second of a two-part blog on high streets and town centres.  In our last post, we highlighted some recent publications that have sought to address the challenges facing our high streets and town centres.

We looked at how towns could work to diversify their retail offer, placing greater focus upon developing experiences and services that are not easily replicated online – such as hair and beauty services, gyms, cinema, restaurants and nightlife.

We also highlighted the benefits of identifying a town centre’s unique selling point (USP), capitalising on the opportunities presented by the widespread growth of technology, and offering various forms of support to local businesses and entrepreneurs.

In this post, we consider how community involvement, good quality inclusive urban design, the promotion of healthy environments and the creation of homes on the high street can all provide ways to promote and support town centres to better meet the needs of local people in a changing retail and economic environment.

A community-focused high street

The town centre has long been considered the beating heart of a community.  As such, it makes sense that any attempt to revitalise them would have local people at its heart.

In Dunfermline, a pilot placemaking project has made use of innovative, interactive methods of engagement with young people to help plan and deliver town centre improvements.

Young people were asked to assess the quality of the town centre and to identify areas where improvements could be made, using tools such as the Place Standard and the Town Centre Toolkit.

There are lots of other great community-focused town centre initiatives. ‘Can Do Places’ aims to engage the local community in order to bring empty town centre properties back into use in various ways, for example, by providing spaces for budding entrepreneurs or supporting community arts and crafts.

Stalled Spaces Scotland is another noteworthy project – with a focus on greening derelict, under- or unused outdoor areas.  As well as improving the look and feel of a town centre, this scheme also aims to involve the local community and schools in the development and use of the spaces themselves.

A healthy and accessible high street

It goes without saying that if town centres are to attract both people and businesses then they must be both attractive and accessible – easily walkable, safe, and clean.  Indeed, amongst its findings, the High Street 2030 report highlights “calls for improved accessibility that is more environmentally-friendly, new public spaces or areas, centres that better serve older people”.

There has also been considerable discussion around how the design of town centres (and urban areas in general) impact upon various vulnerable groups.  We have blogged on this subject on various occasions, focusing in turn on the creation of places that address the needs of older people, people with dementia, autistic people and children.

There has also been widespread discussion of the relative advantages and disadvantages of shared space street design – which has been used by many places in the UK in attempt to revitalise their town centre spaces with varying levels of success.

As well as their role in the creation of inclusive, accessible spaces for all, there has been some focus upon the link between high streets and health.

Last year, Public Health England published guidance on the development of ‘healthy high streets’ – high streets that have a positive influence on the health of local people.  It focuses on elements such as air quality, enhanced walkability, the provision of good quality street design, street furniture, and communal spaces. It argues that the development of healthy high streets will support economic growth as well as community cohesion.

It also approaches the subject of diversity on the high street – recommending that there is an adequate number of healthy and affordable food outlets and limiting the number of alcohol, betting and payday loan outlets.

A high street to call home

Another way of bringing people back into the high street is to have them literally live there.

At the end of 2017, the Federation of Master Builders published a report ‘Homes on our high streets’, which argued that “revitalising our high streets through well planned and designed residential units could help rejuvenate smaller town centres”.

For example, Aldershot, as highlighted in the High Streets 2030 report, has been making use of the Housing Infrastructure Fund to promote residential development in the town centre and has undertaken property acquisition in the town centre, most recently acquiring the former Marks & Spencer  store.

Creating additional homes above shops or in former retail units not only helps to make use of vacant properties and regenerate town centres, but may also help to address housing shortages in many areas.

 Looking to the Future

So while 2019 may present high streets and town centres with some of their toughest challenges yet, there is a wealth of research, experiences and innovative ideas on which to draw.  The newly announced Future High Streets Fund will no doubt be of use to help put these ideas into practice.

And perhaps most importantly of all, local people remain enthusiastic about developing their town centres and wish to see them flourish. As the High Streets 2030 project noted:

The workshops and interactions provided real insight into the challenges faced by town centres. That they are worth fighting for was abundantly evident from the enthusiasm of those participating.”


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