UK regional innovation funding 2026: established mayors to get devolved R&D budgets from 2028

Established mayors in England will receive devolved research and development (R&D) budgets for later-stage innovation for the first time under UK regional innovation funding 2026 plans set out by Prime Minister Andy Burnham on Friday 9 October. Speaking at the Innovation Nation Summit in Manchester, he said the aim was “good growth in every postcode”. The announcement arrives ahead of the Budget later this month, where he signalled more would follow on tax and public investment.

What the regional growth funding announcement changes

According to GOV.UK, established mayoral strategic authorities in England will for the first time receive devolved funding for later-stage innovation. The existing Local Innovation Partnerships Fund (LIPF) will be devolved to established mayors from 2028. The government describes this as “a first step” and says it will devolve a “substantially increased share” of later-stage innovation funding, including to areas beyond the current mayoral authorities. It has not said how much money or when.

The R&D money will sit alongside Good Growth Funds, which the government describes as a single, flexible, long-term growth budget for local leaders. The Manchester Evening News reported that Mr Burnham wants every region to have one, modelled on the fund launched in Greater Manchester in 2025. Separately, UK Research and Innovation (UKRI) will commit £1 billion over four years to high-growth clusters in the Industrial Strategy’s priority sectors.

As a rough guide, £1 billion over four years averages £250m a year if spread evenly. That is our arithmetic, not a government figure, and the sources do not say how the money will be phased. Mr Burnham also said the government is investing over £80 billion in research and innovation in this spending review, so the cluster fund is a small part of the wider total.

Who is affected by local industry investment plans

The LIPF announcement applies only to established mayoral strategic authorities in England. For Scotland, Wales and Northern Ireland, GOV.UK says the government will work with the devolved governments and local and regional stakeholders. The material available to us does not say what that will mean in practice, so readers outside England should not assume equivalent funding is coming.

Businesses and workers in cluster areas are the most direct beneficiaries. GOV.UK says the new partnerships, beginning with the Northern Growth Corridor and the Oxford to Cambridge Growth Corridor, will cover sectors including life sciences, digital and technology, and advanced manufacturing. The government says the aim is to move ideas from research into products, companies and skilled jobs more quickly.

The West Midlands shows the sort of local project involved, though it is not funded by this announcement. The West Midlands Combined Authority said its LIPF supports a Creative Industries Scale-Up Lab, and that its creative sector is worth £4bn, with around 13,700 businesses supporting 38,000 jobs. After 2028, decisions of that kind would rest with local mayors for more areas.

A separate pledge may reach more people. The BBC reported that Mr Burnham confirmed legislation to curb non-compete clauses in employment contracts. Research cited by the government estimates around 5 million jobs are covered by such clauses, typically lasting about six months. He did not set out the scope of the restrictions.

What supporters and critics say about the funding scheme

Mr Burnham argued the change answers a long-standing local request. He told the Manchester Evening News that “by the end of the decade, we will have a new model of public finance in the UK and Manchester will have pioneered it.” Former prime minister Gordon Brown, who spoke before him, praised the “place-based policy” and said research had found 127 innovative clusters covering every region and nation of the UK.

We found no direct criticism of the regional funding in the sources reviewed. The criticism reported on the day concerned non-compete clauses. The Recruitment and Employment Confederation warned against “sweeping” changes, saying the clauses play a “vital role” in protecting commercially sensitive information and client relationships, according to the BBC. The BBC also noted the previous Conservative government ruled out a total ban after employers said it could reduce investor confidence.

Several questions remain open. The government has not published the size of the devolved R&D pot, the timetable for areas beyond the current mayors, or how the £1 billion will be shared between clusters. Mr Burnham also said there is “more to do” on tax to encourage firms to “stay and scale”, but gave no detail.

What to do now

Nothing changes immediately, so the practical steps are about preparation. Check whether your area has an established mayoral authority, and look at its published growth or innovation plans. These are likely to shape who the local money backs from 2028.

Business owners and researchers in the priority sectors should watch the Budget later this month. Mr Burnham said the government would “say more” there about using public investment to encourage private funding, and about tax for high-growth firms. Companies in the northern and Oxford to Cambridge corridors may also want to follow what No.10 North brings forward.

Employees can check whether their contract contains a non-compete clause, and for how long it applies. The legislation has been promised but not yet introduced, and its scope is unknown, so existing terms continue to apply for now.