“Don’t spread the jam”: Lord Jim O’Neill on where the UK should back R&D

Economist Lord Jim O’Neill has spent decades at the sharp end of global finance and public policy. A former Commercial Secretary to the Treasury and Goldman Sachs chief economist, he also led the UK’s landmark review on antimicrobial resistance and now chairs Northern Gritstone, an investment company supporting spin-outs from universities in the north of England.

Here, he explains why the UK needs to stop trying to please everyone, and start backing the places and institutions that can actually deliver world-leading R&D…

Q: You’ve been outspoken on regional imbalance. Has the historic Golden Triangle focus in R&D held back the rest of the UK – and, if so, what should change?

I have very contradictory thoughts about this. We often say to investors that Northern Gritstone, which invests in start-ups from four anchor northern universities, is an arbitrage. Far less money flows to northern universities than to the Golden Triangle, yet if you adjust for the R&D they receive, the performance of their spin-outs is actually as good as Oxford and Cambridge.

So yes, relative regional allocations are wrong; we are idiotically lopsided and over-dependent on London and the South East. But here’s the contradiction: I am strongly against ‘jam spreading’.

The answer is not to spread money everywhere because it superficially feels fair. If you try to please every place and every institution, you dilute impact everywhere. You have to back the places and institutions with a genuine edge – and the capability to use it – and accept that some won’t make the cut.

Q: If we shouldn’t ‘spread the jam’, how do you decide where to back?

It comes down to leadership and the courage to prioritise.

Many decision‑making bodies default to compromise: give everybody something so no one shouts too loudly. That drags you down to the lowest common denominator.

What you really need is conciliation: accepting upfront that some people will be disappointed so that you can do what’s genuinely right. That requires very clear purpose, a strong board and tough criteria.

I don’t think you need to be ruthless, but you do need to be honest. Sometimes you also need to be bold and take some gambles – we can’t always know where the successes will be.

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Q: What does that more selective approach look like on the ground?

Rotherham is really interesting. Productivity there has improved notably, and it’s almost certainly down to the Advanced Manufacturing Research Centre being located there. It’s a powerful example of how, when R&D is linked with well-established firms, things can change.

Place‑based approaches need to back an area’s potential strength. Greater Manchester’s revival is good example. After the IRA bombing in the 90s, rather than trying to resurrect old industries, local leaders focused on emerging strengths – what they could be genuinely world-class at in future.

The same logic applies to universities. People often ask why Northern Gritstone isn’t for the whole of the North. The simple answer is not all universities are set up to do it. We focus on the four with the right ingredients to turn ideas into investments: research strength, tech transfer capability and enough scale that, if we get it right, we can create serious value. Without that focus, you just waste the money.

Q: People often say the UK is brilliant at ideas but poor at turning them into FTSE‑scale companies. What’s going wrong in the UK’s commercialisation machine?

We are pretty good at ideas. We have more universities in the world’s top 100, as a share of global GDP, than the United States, and we’re pretty good at start‑ups, too. Where we fall down is the so‑called valley of death and the follow‑on.

Part of that is this aversion to investment by the private sector. A lot of modern business, particularly publicly quoted firms, are very good at managing balance sheets and their share prices, and the incentives to invest often seem less attractive. And part of it is institutional: many universities don’t yet have the tech‑transfer culture.

The positive side is that we now have institutions like UKRI – particularly Innovate UK – as well as the British Business Bank and new National Wealth Fund, putting real energy into getting the key things in place to help ideas fly all the way through to impact.

Q: The US and China are pouring vast sums into R&D. If we can’t win on scale, what’s the smart way for the UK to play in that game?

Firstly, we should stop thinking about ourselves as competing with those countries. The US is a $30 trillion economy, China’s a $20 trillion economy; we’re a $4 trillion economy. They’ve got massive domestic markets.

Instead, we need to ask what we, as a nation, can be really good at globally. For me, that includes advanced manufacturing, alternative energies, life sciences and AI, especially in relation to governance and regulation.

And then there are our universities. No country of our size has as many top‑ranked universities relative to GDP. They are arguably our greatest global edge. It may be an uncomfortable view, but I think funding bodies should back those globally recognised institutions more than others.

With the advent of AI, I also think backing a bit more non-STEM could be smart, particularly in when it comes to improving Britain’s position in the world.

Q: How should the UK balance societal and economic R&D priorities?

When I led the Review on Antimicrobial Resistance (AMR), we showed that if we do nothing about it, $100 trillion of global GDP could be lost. It’s not just a societal issue; it’s a huge economic one, too.

In many ways it’s one of the most personally satisfying things I’ve ever done, because we had a genuinely global voice on the topic and were regarded as the global leader. For a period, anywhere in the world that AMR was talked about, the UK was right at the heart of it.

It showed what the UK can do when it plays to its strengths: our science base, our legal system and our ability to convene. On things like infectious diseases, climate change and AI governance, we should be using those strengths to lead. In doing so, you can align societal priorities with long‑term economic interests.

Q: What’s the most pressing piece of advice you would give the next Prime Minister on R&D?

Focus on ensuring that public investment spending is not going to be systematically cut each time there’s fiscal restraint. And, within that, ensure there is more investment going into R&D and risk‑taking with new ideas, both regionally and nationally.

If we’re serious about growth – especially regional growth and national competitiveness – R&D cannot remain the first line item chopped whenever the budget is tight.

The views and opinions expressed in this article are those of the guest author, and do not necessarily represent those of UK Research and Innovation (UKRI).