Pictured L-R, discussion chair John Leake, Business Growth Director, Sci-Tech Daresbury and UKSPA Chair; Andrew Carter, CEO of Centre of Cities; Christine Doel, SQW; Professor Tim Vorley, Oxford Brookes Business School.

What is an innovation cluster? It became clear that defining clusters is just part of the issue around encouraging their development, when an esteemed panel recently met to discuss clusters and hotspots at the UKSPA anniversary conference at Warwick University.

Christine Doel, Director at economic and social consultancy SQW, said: “I think it can be lots of different things. There’s lots of definitions out there; lots of academics have written lots of papers, but if I was to pick out one definition, the one I’ve used lots of times, the one I think it’s a pretty good one because it’s short, is basically concentrations of firms and other organisations that produce synergy because of proximity and interdependence.

“And those three words – synergy, proximity and interdependence – are the essence of it.”

Professor Tim Vorley, Pro Vice chancellor at Oxford Brookes Business School, said: “The building blocks within the cluster are what interests me and the colleagues that we’ve been working with.

“Thinking about how we build capacity, how we build capability, relationships with the knowledge-based universities, further education colleges, the importance of skills, the importance of infrastructure, thinking about what it means for leveraging investment within those clusters.”

He continued: “The real interesting thing is how do we look beyond the local to think about how we can leverage the real value within the cluster and also looking across different sectors.

“On one level they’re the most cross-party idea going. No one can really object to the nature of the cluster. I do think what we need to focus on is not where they are but really what they can do and how we can add value to that.

“If we can think about that more, I think that brings us into a real kind of game-changing place.”

Andrew Carter, Director at Centre of Cities, said: “From a policy point of view they’re incredibly fuzzy. No one really knows what they’re talking about when they talk about clusters. We mean lots of different things, and that ultimately inhibits us making progress on policy.

“In a policy sense, I think there are challenges we need to think about.

“Do we have any idea of the cluster as however defined? What’s its performance? Is it doing better than non-clusters?

“Are there constraints from realising more growth We’ve got to be very clear about the constraints to future growth.

“When we observe these constraints, can we do anything about them?”

Hotspots have proved easier to define, as areas of high levels of economic output that are growing fast.

A Centre of Cities report identified 344 hotspots in the UK, 90% of them in urban areas.

They are made up of 15 or more firms in the new economy, with each individual firm no more than 250 metres away from the next firm. The research also found that large hotspots generate higher rates of growth.

Andrew Carter said: “There are returns to scale in economic organisations. The second thing is they are sitting in big pools of skilled and appropriately skilled labour.

“Another factor, often the hotspots are co-located or very closely located to high technology, high innovation firms that are functioning as organisers and catalysers.”

There was often a link to higher education facilities and access to appropriate property at a reasonable price. The areas are also relatively well served by public and private transport.

Author: Simon Penfold

Photography Credit: Ed Nix