British Science Needs Space to Grow

The UK needs planning reform to kickstart growth in the scientific research sector.

If you look at growth statistics you might not believe it, but Britain actually has a lot of technological progress within its grasp. Highly innovative companies like DeepMind and AstraZeneca have the potential to propel the U.K. back on track to becoming a successful growing economy. However, this growth is not a certainty. Our stringent planning system does not allow the firms to have the space needed to facilitate these innovations, undermining the growth of the sector. To properly understand how scientific progress is being stalled in the U.K., it is therefore essential to understand how the planning system works.

Under Section 57 of the Town and Country Planning Act 1990, the “carrying out of any development” requires permission from a local planning authority. In making the decision whether to permit or deny permission to develop land, the authority may consider any “material consideration” providing them with wide discretionary powers to constrain all proposed building. Given those who sit on the local planning authority often are elected Councillors, this creates a powerful incentive for officials to appeal to local lobbying efforts and deny development for spurious reasons not obviously in the public interest. Accordingly, the system is extremely gameable, and public resistance to projects almost certainly guarantees their rejection.

This process directly makes investing in highly desirable areas of Britain harder, as they tend to have the largest shortages of suitable facilities. This is most obvious looking at the so-called Golden Triangle making up the area between Oxford, Cambridge and London. In this region alone there are around 1500 life science firms with a combined Gross Value Added exceeding £8.4 billion in 2018 and providing more than 24,000 highly skilled jobs. Indeed, between 2015 and 2020, almost $1 billion of venture capital funding was invested into Cambridge alone, more than Dublin, Berlin and Barcelona combined.

Most excitingly, this sector is growing. During the pandemic we saw what British life-sciences can achieve through the example of AstraZeneca who created the first vaccine, who more recently have taken great strides to creating vaccines against malaria. The statistics support this observation; two thirds of the life science firms around Cambridge were founded after 1998, employment in the industry between 2011 and 2020 increased by 13%, and real turnover increased by £1.1 billion in the same period.

However, this growth is directly undermined by insufficient developable space in the region.

Vacancy rates run at just a few percent, meaning that when firms need to expand or gain more appropriate facilities for their work they will have great difficulty in doing so. This was made obvious by a report by Bidwells finding that lab space availability was close to zero in both Oxford and Cambridge in June after a surge in demand in the earlier months of this year. With investment in the life sciences growing by 50% a year around Oxford and big names like Apple, Microsoft and AstraZeneca investing in the region, the growth is only going to persist.

By the end of Q2 2020 prime office rents in Cambridge had already risen to £48.50 per sq ft, up 8% from the year before. This makes Cambridge the most expensive market for business accommodation outside of London. Of course, the larger players can afford to pay premium prices for premium land. However, SMEs already make up almost ¾ of life science firms across Cambridgeshire. Start-ups and scale-ups simply cannot afford these prices and those who can will see money that could be spent on research and development redirected to rents, stalling progress and reducing profitability.

Derek Jones, the CEO of Babraham Bioscience Technologies, a company launched to provide space for startups in the life science sector, has commented that:

“Because there is nowhere for the companies at Babraham to grow on to, it means the campus struggles to accommodate the start-up businesses it was intended for”.

In other words, even specific facilities for startups to address the high cost of facilities are now stretched beyond limits, because they are not properly able to help firms scale up and move onto superior facilities.

Although British life sciences lead Europe by a distance, they are yet to grow to a size large enough to invest with America, particularly Massachusetts. Indeed, despite Boston having a population 7.5x the size of Cambridgeshire, it attracts around double the venture and state funding per capita. It is therefore not surprising that Cambridgeshire hosts just 10 publicly traded life science firms, compared to more than 160 around Boston.

Unlike the U.K, America seems to recognise that you need to build if you want this growth to sustain. In 2021 alone Boston had nearly 6 million square feet of lab space under construction. Highly innovative firms have always been highly mobile, and if it is better for them to move to Boston, they will. Simply by not providing appropriate lab space, Britain is signalling to its most exciting companies that they are better off elsewhere.

If we do not allow entrepreneurial individuals in the life science sector to build the facilities they need, then they will not develop the innovative companies that Britain needs to create growth. This is not a crisis yet, but if the rate of development continues, as we all hope it does, then it will quickly become one, and we will see an exodus from the Golden Triangle towards Boston, MA. If the Government wishes to make Britain a scientific superpower, then it must start by reforming planning.

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