Shelving UK’s ‘Silicon Valley’ could cost economy £50bn

A government decision to shelve a strategic plan to create a British rival to Silicon Valley connecting Oxford and Cambridge risks costing the UK economy £50bn, a research report has warned.

A group of more than 60 prominent members of the academic and investment communities is urging greater investment in the “Oxford-Cambridge Arc”, an innovation hub that has grown up around the UK’s two best-known universities.

Ministers have moved in recent months to “deprioritise” the 2017 development plan in favour of prime minister Boris Johnson’s “levelling up” agenda, according to the group.

Sir John Bell, regius professor of medicine at Oxford university, who was involved in the development of the AstraZeneca Covid-19 vaccine, wrote in the forward to the 160-page Radical Capital report that investing in the Arc would “supercharge” its potential and bring wide-ranging benefits for the UK.

“This value add isn’t just measurable in economic terms alone: in the right combination, improvements to knowledge transfer, skills, sustainability and the connectivity of the Arc will spill over into societal returns which far outweigh the impact monetarily.”

Calculations by property advisory company Bidwells and Blackstock Consulting estimate that proactive investment in the Arc could boost cumulative output in the region to £235bn by 2030 — compared with just £185bn if the government maintains its current, “passive” approach.

The region also has a crisis of available laboratory space, with more than 2mn sq ft being sought but only 10,000 sq ft available, Bidwells said.

The government decision to put the Arc project on the political backburner was driven in part by strong local political opposition to plans to build 1mn new houses to support the growth of the technology corridor.

However, the Arc’s supporters argue that the corridor needs to address wider infrastructure issues, including housing and utilities, to avoid repeating the mistakes that led to inequalities and social tensions in California’s Silicon Valley.

Michael Anstey, a partner at Cambridge Innovation Capital which manages over £300mn and has invested in more than 30 Cambridge-linked medtech companies, said active intervention was needed to keep pace with demand.

“The Arc needs government support — the aspiration to make this a global supercluster and a leading innovation geography will only work if there’s appropriate infrastructure in place, from funding, to transport, to housing,” he wrote.

The levelling up department said it recognised “the importance of the Oxford-Cambridge Arc as a globally renowned hub of innovation” and is due to publish the results of an October 2021 consultation on delivering an overarching planning framework for the project “in due course”.

However, local government leaders have expressed frustration at the lack of clarity from Westminster about how the initiative will move forward.

Bridget Smith, Liberal Democrat leader of South Cambridgeshire district council, said only central government could resolve the “critical water and rail infrastructure deficit” the region faces after a decade of housebuilding that had stretched available facilities to the limit.

“Further growth will be hugely constrained unless these problems are solved,” she added. “If government is pulling the plug on the Arc, we need to hear how these crucial issues will be resolved.”

Those urging the government to capitalise on the potential of the Arc include Santander UK, L&G, the Wellcome-Sanger Institute, Abcam, Harwell, and AstraZeneca.

Harriet Fear, the prime minister’s UK business ambassador for life sciences between 2014 and 2018 and now chair of Cambridge Ahead, a lobby group, said the success story of the AstraZeneca vaccine showed that the benefits of the Arc were felt far beyond the region.

“[The vaccine’s] fundamental importance to life and our collective social prosperity is a wake-up call to what’s possible if the region’s innovation ecosystem is fully supported,” she wrote.