English mayors are set to gain more control over local innovation funding, a shift that could matter to small firms in advanced manufacturing, life sciences, clean energy, digital technology and specialist services.
The Department for Science, Innovation and Technology said on 1 June that mayors in established mayoral strategic authorities will be given the ability to decide how and where to target regional R&D investment through the Local Innovation Partnerships Fund after the next Spending Review. The fund is intended to support local leaders, businesses and universities in turning research strengths into practical growth, jobs and commercial opportunities.
For SMEs, the announcement is not an immediate grant deadline. It is a sign that more innovation support may be shaped locally, with mayoral authorities expected to have a stronger say over which sectors, projects and partnerships receive backing.
What has been announced
The government said future control of the Local Innovation Partnerships Fund in England will move towards regional leaders. Areas referenced in the announcement include Liverpool City Region, West Yorkshire, Greater Manchester and Greater London, with the aim of letting local leaders target funding around regional strengths.
The fund is part of the wider UK R&D settlement and follows a previous commitment of GBP500 million for Local Innovation Partnerships between 2026 and 2031. The government said the level of future funding will be subject to affordability decisions at future Spending Reviews, so small firms should treat this as a direction of travel rather than a guaranteed pot available on fixed terms today.
The announcement also highlighted two Liverpool City Region projects set to receive GBP23.7 million of the region’s GBP30 million Local Innovation Partnership funding. The projects, led by the University of Liverpool, focus on AI and robotics in materials chemistry, and AI-enabled rapid innovation in antimicrobial, anti-viral and anti-biofilm surfaces and materials.
Why it matters for small businesses
Innovation funding can feel distant from day-to-day small business pressures. Many firms are more worried about wages, energy bills, late payments and demand. But for companies that already have a technical product, specialist process or research partnership, locally directed funding can create routes into pilots, supply chains, facilities and collaboration networks.
The most relevant SMEs are likely to be those close to a region’s stated strengths. That might include manufacturers with a materials or automation angle, software firms working with AI or data, clean-tech suppliers, health and life-science businesses, engineering consultancies, testing specialists and university spinouts.
BritishSME has previously covered how regional investment can open doors for engineering SMEs. This latest announcement points to a similar principle in England: public innovation money is increasingly being tied to local economic strengths, partnerships and jobs.
What SMEs should check now
The first step is to understand where the business fits locally. A firm should look at its mayoral combined authority, local enterprise and growth bodies, universities, catapults and innovation districts to see which sectors are being prioritised. If a region is talking about materials, health tech, clean energy, AI, advanced manufacturing or creative technology, SMEs in those fields should map where their capability could plug in.
The second step is to get collaboration-ready. Funding of this kind often flows through partnerships rather than simple standalone grants to one small company. SMEs should prepare a short capability statement, evidence of previous work, financial basics, insurance details, cyber and data credentials where relevant, and a clear explanation of what problem their technology solves.
The third step is to watch for calls from local authorities, universities and delivery partners rather than only central government pages. If more control is devolved, opportunities may appear through regional programmes, challenge calls, accelerator activity, procurement notices and university-led projects.
Do not wait for the deadline
Small firms often miss innovation opportunities because they start gathering information after a competition opens. That can leave too little time to find partners, cost a project properly, check match-funding requirements or agree intellectual property terms.
Owners and managers should use the next few months to identify likely partners and keep a simple opportunity tracker. That could include relevant universities, local authority innovation teams, sector clusters, larger firms with supply-chain programmes, and business support organisations that understand the local funding landscape.
Cash flow still needs attention. Innovation funding can help a firm test and grow, but projects may involve staged payments, reporting work and staff time before commercial revenue arrives. Our coverage of late payment pressure on UK SMEs is a useful reminder that growth projects still need working-capital discipline.
The practical takeaway
The move towards mayoral control of local innovation funding is most useful for SMEs that can connect a clear technical capability to a regional priority. It is not a reason to chase every funding announcement, but it is a reason to understand local growth plans and prepare before calls open.
For English SMEs in R&D-heavy sectors, the practical checklist is straightforward: identify the local priority sectors, write a concise capability statement, build relationships with universities and delivery bodies, and keep documentation ready. Firms that do that early will be better placed if regional innovation funding becomes more locally targeted after the next Spending Review.
Sources
- Department for Science, Innovation and Technology, Regional leaders to get more power over innovation funding to drive local jobs and growth, 1 June 2026
