By Bruntwood Scitech Contributor Kath Mackay
As the UK looks to sharpen its competitive edge on the global stage, innovation remains front and centre in political, industrial and academic discourse. But it faces a critical challenge: how to ensure innovation is not just fast, but fair, strategic and grounded in the realities of the UK economy.
Too often, we treat innovation as a narrow race toward the future – measured by the pace of AI development, scientific breakthroughs, or unicorn company formation. These areas matter, of course. But in focusing solely on emerging technologies, we risk overlooking the structural conditions that enable innovation to flourish – particularly embedded, collaborative regulation and balanced investment across the full breadth of the UK economy.
Place-based regulation in action
This spring, the Information Commissioner’s Office (ICO) announced it would relocate to Manchester’s Circle Square – a £750 million innovation neighbourhood being delivered by Bruntwood SciTech – that is home to many of the firms it regulates.
By embedding itself within the very ecosystem it oversees, the ICO is embracing a new model of regulator-as-collaborator. It will be located alongside numerous data-led businesses enabling more direct, real-time dialogue between policy and practice. The ICO has already taken steps to collaborate with other regulatory bodies to drive the innovation agenda, such as the Financial Conduct Authority (FCA) where they are supporting the FCA in drafting a statutory code of practice on AI – offering clarity and direction to financial services firms in a rapidly evolving space.
The Medicines and Healthcare products Regulatory Agency (MHRA) is following a similar path, opening a second headquarters in Leeds to be closer to the North’s growing health innovation base. These shifts signal a recognition that regulation is not an obstacle to progress but a critical enabler of responsible, adaptive innovation – especially when physically embedded in place.
It also responds to growing public pressure. Recent polling shows that 72% of UK residents feel more comfortable with AI technologies when clear regulation is in place. And 88% support government intervention where harms may emerge post-deployment. Trust is not a nice-to-have; it is the currency of innovation.
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R&D should reflect the economy of today
At the same time, we must challenge another belief: that R&D is solely a vehicle for unlocking the technologies of tomorrow.
The UK’s research and development investments remain heavily skewed towards a handful of high-profile sectors – particularly life sciences, advanced computing and AI. While these are undoubtedly important, we risk neglecting the sectors that are already driving our economy.
The services sector – including finance, education and creative industries – accounts for around 75% of UK business activity. The creative industries alone contributed £124.6 billion to GVA in 2022. Yet they remain chronically under-supported in terms of R&D funding and innovation infrastructure. This isn’t just a cultural gap; it’s an economic blind spot.
Meanwhile, regional disparity persists. While total UK R&D spending hit £66.2 billion in 2021, a large share of this investment remains concentrated in the ‘Golden Triangle’. And despite rhetoric around the now defunct term ‘levelling up’, many of the most dynamic innovation ecosystems in cities like Manchester, Leeds, Birmingham and Liverpool still face gaps in access to capital, lab infrastructure and public funding.
We cannot afford a two-tier system – where one version of innovation is highly funded, regulated and supported, while other economically critical sectors are left out of the frame.
A call for balance
If the UK is serious about being a global innovation leader, we must do more than bet big on future-facing technologies. We need to ensure that our regulatory infrastructure and investment priorities reflect the real shape of our economy, including those sectors that have sustained jobs, productivity and export strength for decades.
That means encouraging regulators to locate within the clusters they oversee, as the ICO and MHRA have done. It means ensuring that R&D funding supports not only scientific discovery but also commercially-driven innovation across finance, education and the creative sectors. It also means designing infrastructure – from labs and workspace to data centres and studios – that is flexible and future-ready, serving the needs of a wider range of industries. And finally, it means recognising that trust, place and collaboration are just as vital to innovation as the technologies themselves.
Innovation doesn’t happen in isolation. It happens in ecosystems – where universities, startups, established businesses, regulators, investors and communities interact. We need to build and support those ecosystems in a way that’s both forward-facing and grounded in economic reality.
If we can do that, the UK won’t just be a nation that invents the future. We’ll be one that delivers it – inclusively, sustainably and at scale.
1. Source: https://www.ft.com/content/c572a796-258b-433f-b005-9a3ff6f56062
2. Source: https://www.ft.com/content/c572a796-258b-433f-b005-9a3ff6f56062
3. Source: https://www.theguardian.com/business/2025/jun/04/uk-service-sector-confidence-higher-in-june-than-since-before-autumn-budget
4. Source: https://pec.ac.uk/wp-content/uploads/2024/04/Improving-economic-statistics-in-the-creative-industries-Creative-PEC-Research-Report-April-2024.pdf
5. Source:https://researchbriefings.files.parliament.uk/documents/SN04223/SN04223.pdf
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