Oxfordshire has the most innovative economy in Britain, while areas such as Merseyside and Teesside outperform London and Manchester, according to the first “innovation map” of the UK.
The findings by the Enterprise Research Centre (ERC) challenge the commonly held view that Britain is dependent on London for innovation and growth. is an “arc of innovation” stretching from Cambridge through the southeast Midlands and along the M4 corridor to take in Oxfordshire and Gloucestershire.
Only 17 per cent of London businesses introduced a new or updated product or service in the two years surveyed, compared with 27 per cent in Oxfordshire.
The study, “Benchmarking local innovation — the innovation geography of the UK”, ranks 45 economic regions by their innovation activity between 2010-12. That includes new services, research and development and collaboration among companies.
The data come from 14,000 companies that responded to the UK Innovation Survey 2013.
England was divided into the areas covered by 39 local enterprise partnerships, business-led growth bodies.
Oxfordshire was top with Tees Valley, at number seven, the best northern region. Liverpool was 10th with Greater Manchester, the heart of the government’s drive to close the north-south divide, 20th. Rural Dorset was sixth while London was 25th. Eastern Scotland, Northern Ireland and Cumbria filled the bottom three places.
Prof Stephen Roper, who led the ERC research, said: “The findings run counter to the dominant narrative of a country dependent on London, with innovation being more dispersed across the country than was previously thought.
“Innovation is strongly linked to growth, exporting and productivity — all areas in which the economy needs to improve if we want to boost our international competitiveness.”
London’s huge business base may be a factor in its low innovation rate relative to areas with fewer established businesses and a greater percentage of start-ups.
The academics also believe London’s specialisms in service sectors such as law and finance, which tend to be highly regulated, also act as a drag.
The Oxfordshire belt contains many high-end manufacturing companies, especially in the motor industry, and has several big universities. The top regions outside England were West Wales and the Valleys in 34th place and southwest Scotland in 35th.
The survey found that while nationally 45 per cent of companies reported being “innovation active”, only 18 per cent were creating new products.
Innovation was more prevalent in central areas, with the east coast recording some of the lowest levels.
The proportion of companies undertaking R&D varies widely by local economic area in England from 28 per cent in Oxford and 26 per cent in Cambridge to 8-10 per cent in Lincolnshire and the west of England.
Teesside manufacturers have had to innovate to survive. Carroll & Meynell in Stockton-on-Tees has been making transformers for 40 years and has 113 employees and a turnover of £8.5m.
Recently, it applied to patent a transformer capable of charging up to 10 electric vehicles at once. John Auger, operations manager, said: “We are not going to be able to compete with the rest of the world on labour costs, so we need to compete in manufacturing products that require a certain level of skills to produce.”
The ERC is supported by five universities, including Imperial College London and Aston.