This session explored the role of innovation, public support, collaboration and transport connectivity in shaping productivity and growth. It considered why innovation activity matters for firm performance, how repeated innovation grants affect firms beyond the first award, and whether transport reliability influences the success of collaborative research projects.
The session positioned innovation as a central driver of productivity and growth, while also highlighting a puzzle in the UK evidence base. Although the UK performs strongly in international innovation rankings and provides substantial public support for R&D and innovation, the proportion of innovation-active firms appears to have fallen across many sectors since the mid-2010s. The opening discussion stressed that innovation support matters, but that the design, targeting and sequencing of that support are critical. Across the two papers, a common theme emerged: aggregate measures can conceal important variation beneath the surface, with outcomes shaped by firm size, leadership role, collaboration, project scale, transport connectivity and the reliability of enabling infrastructure.
The first paper examined whether repeated public innovation support continues to generate additional benefits after firms receive their first Innovate UK grant. The analysis focused on manufacturing firms, using Innovate UK project data linked to Orbis and Orbis intellectual property data over the period 2007 to 2023. Rather than comparing all supported firms with unsupported firms, the study adopted a sequential framework: firms receiving a second, third, fourth or fifth grant were compared with otherwise similar firms with the same prior funding history.
A key finding was that the first grant had a positive effect on patenting, consistent with previous evidence that public support can stimulate innovation. However, the impact of repeat grants was not linear. The second grant showed little clear effect, but innovation effects re-emerged for later grants, particularly around the fourth and fifth awards. The findings therefore challenge a simple diminishing-returns interpretation and suggest that repeated support may continue to matter, though not uniformly across firms or outcomes.
The heterogeneity analysis indicated that younger firms and firms acting as project leaders appeared to benefit more strongly in innovation terms. The employment effects were more mixed, with some negative employment impacts associated with later grants, although collaboration appeared to mitigate these losses. The policy implication was therefore not simply to provide repeated support broadly, but to target later-stage support more selectively where it is most likely to generate sustained innovation without weakening employment outcomes.
The second paper considered whether transport connectivity affects the performance of collaborative research projects. The presentation started from the observation that research and innovation are often collaborative and that complex knowledge is frequently transmitted through in-person interaction. Using publicly funded research project data and information on travel times and rail performance, the paper examined whether train reliability was associated with publication outputs and the likelihood of future collaboration.
The analysis found that better train performance was associated with more publications from collaborative projects, especially among natural science projects. The effect appeared strongest where train lines had previously performed poorly, suggesting that improvements in unreliable connections may have particularly large benefits. This finding reframed transport infrastructure not only as a mobility issue but as part of the enabling environment for research collaboration and innovation-led productivity growth.
The discussion raised questions about how far these findings apply after the wider adoption of Teams and Zoom, whether physical proximity remains especially important for laboratory-based or natural science collaborations, and how the analysis might be extended to business collaborations, venture capital relationships and multi-partner projects. Participants also noted that the frequency and reliability of connections may matter as much as average delay, particularly outside London and on routes where missed connections can significantly disrupt meetings.