In his first big economic set-piece after the Brexit referendum, the UK Chancellor set out funding priorities for Theresa May's Government in his Autumn Statement. He had little room for manoeuvre, hemmed in by previously agreed savings, lagging UK productivity, and a weaker economic performance as a result of the referendum outcome.
Against this unfavourable backdrop, Philip Hammond focussed investment on what will give the best returns for the future. Infrastructure, digital connectivity and innovation were all promised significant increases in funding, which is fantastic news for the urban innovation agenda. And the process of devolving powers and resources to cities, which started under the previous administration, was reaffirmed and strengthened.
Given the fears of an economic slowdown and the low cost of borrowing, infrastructure was always going to be a big ticket item. This is evident in the announcements of investment in traditional infrastructure such as roads and rail, and the boost to low-emission vehicles. For me, the big theme was the investment in digital connectivity: £1bn by the end of the decade to support the roll out of full-fibre connections and future 5G communications. This should bring faster and more reliable broadband for homes and businesses across the UK, boost the next generation of mobile connectivity and keep the UK at the forefront of the coming Internet of Things revolution. And, in addressing the productivity gap, the government has also asked the National Infrastructure Commission (NIC) to undertake a new study on how emerging technologies can improve infrastructure productivity.
So, good news it seems for the 'smart cities' agenda...
Good news, too, for innovation. The Prime Minister announced a boost in funding with a promised £2bn for R&D to enhance the UK's position as a world leader in science and innovation. Last month I blogged about the need to support future growth businesses with targeted assistance for research and innovation, and I'm hoping the new Industrial Strategy Challenge Fund will do just this. The cross-disciplinary fund - set up to support collaborations between business and the UK's science base - will set identifiable challenges for UK researchers to tackle. It will be managed by Innovate UK and the UK research councils and modelled on the USA's Defense Advanced Research Projects Agency programme. The challenge fund will cover a broad range of technologies in which the UK can have a leadership position.
And there's more. Additional funding will be granted in the fields of innovation, applied science and research, to increase research capacity and business innovation, thereby furthering support for the UK's exceptional research base and unlocking its full potential. Funding - allocated by the soon-to be established UK Research and Innovation (UKRI) - will be awarded on the basis of national excellence, and include a substantial increase in grant funding through Innovate UK.
This is a big vote of confidence in Innovate UK, the Government sponsored innovation agency which works with businesses to find and drive the science and technology innovations that will grow the UK economy.
As well as supporting innovation, the Chancellor also committed to supporting the scale up and commercialisation of the best ideas. "I am taking a first step to tackle the longstanding problem of our fastest growing technology firms being snapped up by bigger companies, rather than growing to scale," said Hammond. He promised to review the financial barriers that prevent many UK startups from scaling-up and also to improve procurement from small businesses. The Autumn Statement also announced the creation of a Northern Powerhouse Investment Fund in early 2017 to support local SMEs, and that the first investments from the Midlands Engine Investment Fund would flow shortly after.
These investment funds are part of a package of new money and power to cities and city-regions to drive innovation and productivity themselves. The City Deals currently under discussion were reaffirmed, the Local Enterprise Partnerships (LEPs) were given a further £1.bn for Growth Deals, and there will be new borrowing powers for Metro mayors to invest in economically productive infrastructure and housing. There is a second devolution deal for the West Midlands, talks on future transport funding with Greater Manchester and the Budget for Work and Health programme transferred to London and Greater Manchester. Mayor of London Sadiq Khan saw the commitments from the Chancellor as positive "first steps towards a major devolution deal for the capital".
As the work begins and the dust starts to settle on this year's Autumn Statement, I think we can see it as a real shot in the arm for infrastructure, R&D and innovation. These measures should see a real return in terms of productivity and growth. They should, too, help the UK keep up in telecomms developments. And they present a great opportunity to push even harder on urban innovation, so our companies can continue to develop and sell world-beating products and services that help cities thrive.