What must be done to create an innovation-friendly environment?
A panel of business leaders from York and North Yorkshire examined the main barriers to innovation in the region and what can be done to overcome them.
The Invest North York and North Yorkshire roundtable in York was staged to uncover some of the solutions required to drive faster economic progress across the region.
The event was chaired by TheBusinessDesk.com’s joint managing director, Alex Turner.
Gary Woodhead, co-founder of proptech firm Curveblock, pointed out his own business still can’t get an account with a traditional bank because of its use of blockchain technology.
“The UK always says it wants to be a pioneer of innovation, but the change in mindset needs to come from every level because innovators can’t work without banks and plcs,” he said.
“Yes we need regulation, but at the moment it is creating financial exclusion. It’s saying to society, ‘you’re not clever enough to play in the arena.'”
Woodhead said sandboxes are the answer – where businesses such as his can test ideas in a controlled environment.
“The problem with very game changing innovation is that it creates a new environment and everyone who is a power house becomes risk averse,” he added.
“I’d like these people to be more receptive to sandboxes. This is a way in which big organisations can cover themselves. They can say, ‘this might not work out, but at least we’re trying to work with these innovators.'”
Richard Hall, managing director at PD-M, stressed the importance of incubators and accelerator programmes, along with funding and mentoring for those SMEs that have a good idea. “That is something we could do more of,” he said.
“Disruptive innovation is one of the most difficult things you can do. The appetite for innovation is lacking in UK PLC.
“But there is a sea change happening. I think banks will start to mobilise and begin to accept the risks.”
Connar McBain, senior public affairs manager at Phoenix Group, picked up on the risk angle, saying: “We need to be much better at risk calibration. We’re quite risk averse for a country that likes to see itself as an innovator.
“Right now it’s easier for us invest in a coal mine than in a wind farm because a mine has decades worth of return it can demonstrate to the regulator.”
He said Phoenix wants to invest all over the UK, noting the country has an exciting opportunity “to unleash the firepower of the pensions sector.”
McBain said: “The certainty of forward planning is really important. Combined authorities helps us with this. We have a fiduciary duty with pensions so we need predictability for cash flows.
“We need to ensure we can provide the best possible retirement outcome for policy holders. So local authorities must come forward with plans that can work and have the potential to work for many decades to come. We need to have a stable investment environment.”
Laura Hood, project officer at North East and Yorkshire Net Zero Hub, said a key demand she would make of the Government or a new North Yorkshire Mayor would be: “certainty in national policy.”
Henri Murison, chief executive of Northern Powerhouse Partnership, agreed that certainty was needed for investment, but warned: “We have a lack of regulatory certainty and that is a challenge in a number of sectors.”
He said devolution for the region should create a better landscape for investing in promising economic opportunities, noting: “At the moment we have very limited firepower to invest in things, especially for doing anything out of the ordinary.”
James Farrar, CEO at York and North Yorkshire LEP, said once devolution delivers a mayor for the region, this should enable more strategic thinking, which can break down some of the barriers to growth.
“We need to innovate to create solutions and best way to do that is through devolution,” he said “If we try to do it nationally, it is too slow.”
Natalie Boswell, regional development director at Lloyds Bank, said the new North Yorkshire Council, which will formally come into being on 1 April to cover the area administered by North Yorkshire County Council and seven current separate district councils, should create a more joined up approach for the region.
And she said Lloyds Bank’s new CEO has placed a heavy emphasis on backing growth and supporting SMEs.
“Our strategy is around growth with purpose, not just increasing someone’s bank balance for the sake of it,” she said. “One in five SMEs bank with us so we have a real obligation to this sector.”
Ruth Shann, head of operations at West and North Yorkshire Chamber, asked whether enough is being done to attract more SMEs to North Yorkshire, and whether these companies can be nurtured when they do arrive.
“If 100 more businesses come to North Yorkshire do we have the infrastructure in place to support them?” she asked.
Neil Ferris, corporate director of place at City of York Council, warned the current Government regulatory environment hampers investment in infrastructure, which in turn stymies local ambition.
“The mantra of public funding in the UK is that State does not pick winners,” he said. “The market has to decide on the best allocation of capital.
“We have to show that York is a desirable place to be and that we have the best investment proposition.”
Chris Yates, CEO at medical diagnostics tests maker Abingdon Health, said: “We need to improve the environment for innovative growth companies.
“We have the constituent parts to make this happen. The working environment here is fantastic. It’s a great place to live and work but we need to bang the drum more.
“There’s a growing life science and diagnostics cluster in the area. It’s beginning to develop but it’s still pretty embryonic. As a sector we have a lack of available lab space. That’s one of the issues we face.
“We’re looking for investment in infrastructure as transport is another big issue. I’ve got customers coming from overseas who fly into Manchester and we know of the challenges involved in getting from Manchester to here.”
The North is full of investment opportunities and world-class economic strengths. Accelerating progress and unleashing its full potential can rebalance the national economy and change the lives of the people who live and work here.
Invest North is being led by TheBusinessDesk.com, in partnership with Northern Powerhouse Partnership, Squire Patton Boggs, Phoenix Group, and Lloyds Bank. It is also being supported by the Northern Powerhouse Investment Fund, Curveblock and Influential.
Through a series of round tables, research and interviews it will identify the investment opportunities and policy requirements that can make a significant difference to the economy of the North.
Visit investnorth.thebusinessdesk.com to find out more.