Ivor Campbell, chief executive of Snedden Campbell, takes a closer look into the Cambridge cluster.
The Cambridge cluster began in 1960 with the formation of Cambridge Consultants as a way of linking the technical expertise of the university with the needs of industry.
Today, it comprises around 5,000 knowledge intensive firms, employing 61,000 people and generating combined annual revenues of more than £15.5 billion.
As one of Europe’s largest technology clusters, it is a significant success but there is still some frustration that it is not meeting its true potential. In commercial terms, the Cambridge cluster is still only scratching the surface of what is achievable.
If the UK is to achieve Rishi Sunak’s ambition of becoming a life sciences superpower, areas such as Cambridge could and should be doing more, but there appears to be a lack of joined-up thinking and effort to help them achieve it.
While the city can certainly claim to be the sector’s leading UK centre, there are persistent structural and cultural restrictions limiting its growth.
The University of Cambridge is doing its bit by producing armies of entrepreneurially minded, technical specialists and there is no shortage of ready funds to help them turn their ideas into successful ventures.
The problems appear to start at the point where commercial, municipal, regulatory, and human forces collide. Obstinate and inflexible investors, planners and talent are creating a bottleneck that is frustrating prospects for growth.
The most significant of the structural problems is a current lack of laboratory space for growing life sciences businesses to move into.
Bidwells, a commercial property agent, recently estimated that there is two million square feet of demand in Cambridge, compared with only 10,000sq ft of available space.
With nowhere for start-ups to base themselves, there is concern that blue sky businesses of tomorrow will be forced to move abroad.
Developers say that a restrictive local planning system – as well as rising building costs – is to blame for preventing them building new laboratories quickly enough. The Greater Cambridge Shared Planning Service has conceded that it has been unable to recruit enough officers.
While some former shopping centres and office blocks have been repurposed to boost supply, it has had the effect of pushing-up rents to record highs, with lab space now costing more than £60 per square foot, compared with £42 pre-Covid.
Developers tend to regard building labs as niche and risky because upfront costs are usually higher and the planning experience more complicated and uncertain than with standard commercial projects.
While the UK has a profusion of incubator spaces for early-stage companies with one or two founders, there are almost no facilities for biotech companies that have moved beyond the start-up phase – the cornerstone of a functional bioeconomy.
Much of the investment money that start-ups receive is spent creating the physical infrastructure they need to operate, instead of recruiting talent, research and development and developing products and processes. Many outgrow those spaces within a short timescale and have to go through repeat funding rounds to finance further growth.
The second structural problem is the assault course that passes for a planning process in Cambridge, particularly in gaining permission for new labs. Proposals take so long to reach approval that many firms proceed with applications they realise are flawed or inappropriate half-way through the process but press-on regardless, because to raise issues at that stage often means going back to the beginning.
Cambridge is notorious for its planning applications attracting frivolous objections which can delay developments for months or even years, slowing progress and acting as a disincentive to potential investors.
Then there are cultural factors inhibiting growth of the Cambridge cluster, the most human of which appears to be a refusal by incoming talent to live anywhere beyond the geographic limits of the city.
As well as restricting growth of the area’s potential workforce, this has also had the effect of driving up residential property prices to exorbitant levels.
It’s noticeable how focused on Cambridge the cluster actually is, with perfectly respectable commuter belt towns like Saffron Walden or Ely seemingly off limits.
The city’s magic doesn’t appear to travel well perhaps, at least partly, because it is so orientated towards the social and cultural cachet of living in the shadow of academic spires.
This seems to be peculiarity of the UK, as the same geographical restrictions don’t apply, for example, to Boston or San Diego.
Life sciences companies based in US cities appear perfectly happy to recruit people from further afield, and the workers seem happier to commute from longer distances. It’s not unusual for scientists to pack-up their belongings and move from San Diego to Boston, but it is unusual for people to move even the shortest distances in the UK.
Cambridge could perhaps learn from the experience of Aberdeen, following the arrival of the North Sea oil and gas industry in the 1970s.
It too became heavily focused on the city, with senior executives, engineers, geologists, and other specialist talent, snapping-up its most desirable homes, driving up property prices to the point where Aberdeen became the most expensive place to live in the UK, outside of London.
Workers from support sectors were drawn from a relatively small geographic area from Stonehaven, 16 miles south of Aberdeen, to Ellon, around the same distance to the north.
Painters and decorators and day labourers were suddenly paid colossal sums to work in the oil and gas industry, while factory production line workers found themselves able to double or even triple their wages by working 12-hour shifts offshore.
In order to compete, national companies with branches in Aberdeen had to dramatically increase the salaries they paid to attract middle and senior managers. As a result, they had to pay twice the rate for a business development executive in Aberdeen as they would in Nottingham, for example.
Of course, the downside became painfully apparent with the collapse of the global price of oil in 2020, when residential property prices in Aberdeen virtually halved overnight as the city experienced record high levels of unemployment.
So, what lessons can we learn for Cambridge or any other cluster? If the UK is to become a life sciences superpower, it must become more ambitious about the types of job it seeks to attract, and more willing to widen the geography of the cluster beyond the city boundaries.
Cambridge is excellent at setting up companies to commercialise the work of its graduates, but less good at turning them into properly functioning commercial entities, capable of manufacturing and selling the products.
Addressing these structural and cultural issues is necessary to grow the life sciences industry exponentially, to include the production facilities as well as the high-value intellectual processes.
In the noughties, UK life sciences companies thought the way forward was to offshore low-tech manufacturing while retaining and growing our high-tech manufacturing base. What they didn’t account for was the continuum that exists between low, medium, and high-tech operations. If you have one, then it’s easier to do the others.
While you can find people to operate the machines, when it comes to the more complicated business of setting up the machines and making sure they work properly, you don’t have the necessary pool of skilled workers.
Cambridge is rightly considered the jewel in the crown of UK life sciences but for it to shine at its best, it requires a bit more polish.