The New Frontier - Your weekly science and innovation update - 20th July 2026

Devolution gets a balance sheet.

Rachel Reeves used her Mansion House speech to advance an idea first trailed in her Mais Lecture: giving regional mayors greater control over locally generated tax income. Consultations are also examining how a tourist tax might operate. Local leaders may not gain complete freedom to set tax rates, but they could secure much greater control over how revenue is spent. That would represent a meaningful shift. Only 5% of UK tax revenue is collected locally, with the remaining 95% flowing to central government. Greater control over recurring revenue could allow places to plan for transport, skills, housing and regeneration over longer periods, rather than relying on competitive Whitehall funding rounds. For businesses and investors, this should make local infrastructure and industrial plans more credible, thereby fostering greater confidence in investment. Questions, however, remain over whether fiscal devolution will tackle inequality and spread growth, or sharpen competition between cities.

Rachel Reeves also used the speech to provide a stocktake. Seventeen pension providers signed the Mansion House Accord, committing to invest 10% of default funds in private markets by 2030, with at least 5% allocated to the UK. Large multi-employer defined contribution schemes are estimated to have added roughly £10 billion to their private-market allocations during 2025. Nest announced a £200 million venture capital allocation managed by Schroders, which could rise to £1 billion by 2030 and will have a stated preference for UK unlisted businesses. Legal & General’s Lifetime Advantage Fund has passed £25 billion and exceeded a 10% allocation to private markets, while Standard Life’s Future Opportunities fund is targeting around 25% over the long term.

PISCES, the new trading platform for private companies, is also open. An overhaul of the prospectus regime and three years of Stamp Duty Reserve Tax relief for newly listed shares are intended to make UK public markets more attractive.

The government’s ambitions for AI sovereignty now include a Sovereign AI unit, an AI hardware plan and an advanced market commitment for quantum technologies.

Barnsley’s AI upgrade

Applications have opened for an £800,000 AI Upskilling Challenge Fund in Barnsley, which was named the UK’s first Tech Town in February. Organisations can apply from anywhere, provided the training is delivered locally and has the potential to scale nationally. Priority will be given to manufacturing SMEs, older residents, and entry-level workers, precisely the groups most at risk of being bypassed by the technology. The programme forms part of a wider commitment to give 10 million British workers AI skills by 2030. The amount is modest and should not be mistaken for the creation of an AI cluster. The more interesting signal is the choice of location and audience.

AI adoption outside the largest cities will depend more on whether established companies can use the technology productively. Training contracts can attract providers, support local recruitment, and give companies a reason to invest. But skills are only one part of the equation. Companies also need reliable power, strong digital connectivity, suitable premises, and access to customers. A training programme may plant the seed. An operating ecosystem determines whether it grows.

Defence moves at wartime pace

UK Defence Innovation (UKDI), the Ministry of Defence’s consolidated innovation team, has set out the priorities for its ringfenced annual budget of at least £400 million.

Its money will be directed towards autonomous platforms, AI-enabled decision-making, resilient logistics, precision systems, and protection technologies, including advanced materials, sensors and counter-drone capabilities. UKDI sits within the National Armaments Director Group and promises to operate at what it calls “wartime pace”.

Private capital is moving alongside it. Lockheed Martin Ventures, the company’s $1 billion corporate investment arm, is opening a London office and earmarking at least $100 million for the UK and Europe. The logic is to invest earlier, test whether new technologies can work with existing platforms and bring successful businesses into Lockheed Martin’s supply chain. Since 2007, the fund has invested more than $500 million in over 120 companies and has developed 60 of them into suppliers. That last figure is the important one. For many defence startups, the meaningful exit is not necessarily a flotation. It is a place within a major contractor’s industrial network.

Helsing provides another substantial signal. The German defence tech company has raised $1.8 billion at an $18 billion valuation and is already investing £350 million in the UK, primarily in connection with the UK-Germany defence agreement.

This will not translate into a single, uniform property requirement. Software and AI businesses may initially need secure offices, resilient connectivity, and access to compute. Hardware companies require workshops, prototyping and light manufacturing. Autonomous systems businesses need secure testing environments. Space companies may require cleanrooms and integration facilities. Larger suppliers will need production and logistics capacity.

Security, power, and proximity to engineering talent will often matter more than a prestigious address. That creates opportunities beyond London, particularly in places with established aerospace, engineering, military, or manufacturing capabilities.

Pharma’s footprint extends

The Association of the British Pharmaceutical Industry has updated its Pharmaceutical Impact Map, drawing on ONS and other public data to show the sector’s contribution across the country.

The figures are substantial: 125,702 jobs in pharmaceutical manufacturing or research, £20.4bn in average gross value added, 3,658 NHS-industry collaborations, 186 manufacturing sites and 646 R&D sites.

England accounts for 110,774 jobs, 552 research sites and 155 manufacturing facilities. Scotland has 5,900 jobs, Wales 4,778 and Northern Ireland 4,250, supported by research and manufacturing sites in each nation.

The Golden Triangle remains the UK’s deepest life sciences ecosystem, but it does not represent the sector’s entire physical footprint. Pharmaceutical activity also follows manufacturing capacity, NHS partnerships, universities and specialist supply chains.

Hiring sentiment improves

ManpowerGroup’s latest Employment Outlook Survey points to a cautious improvement in UK hiring sentiment. The UK’s Net Employment Outlook reached 37%, up ten percentage points over the quarter. Almost half of employers expect to increase staffing, compared with 12% planning reductions. IT leads hiring intentions, though STEM talent shortages remain a persistent constraint.

Founders tell a similar, if less comfortable, story. According to The Entrepreneurs Network, 65% consider the UK an easy place in which to start a company, but only 14% think it is easy to scale one. Tax levels and incentives were identified by 68% of founders as the clearest sign that a country is serious about entrepreneurship, followed by access to capital at 60% and simpler regulation at 49%. Despite that pessimism, 43% expect to increase headcount over the next year, while only 10% anticipate reductions. More than a third intend to increase R&D spending.

Quantum adds the hardware

Quantinuum, Rolls-Royce, Riverlane and EPCC, the UK National Supercomputing Centre at the University of Edinburgh, have signed a multi-year agreement to explore how quantum computing could support industrial workflows.

The first use case is gas-turbine design. Quantinuum will supply quantum machines and software, including its 98-qubit Helios system. Rolls-Royce will provide the engineering challenges, Riverlane the error-correction and algorithmic capabilities, and EPCC the supercomputing infrastructure and integration.

The aim is not to replace conventional supercomputers. It is to use quantum machines to accelerate particular calculations within demanding industrial processes, including computational fluid dynamics.

The British partners have worked together using emulators for around five years. What is new is the hardware.

This is how credible clusters tend to form: around shared infrastructure, specialist expertise and difficult commercial problems. Edinburgh’s advantage is not simply that it can claim activity in quantum computing. It is that quantum capability is being connected to supercomputing and a major industrial use case.

New research: Quantifying Technology in Real Estate

Our latest Quantifying Technology in Real Estate research examines what the rise of AI could mean for occupiers, investors, landlords and developers.

The first wave explores:

• The future of work: how AI could reshape jobs, skills, tasks and team structures, and what this could mean for office demand and workplace strategy.
• AI-ready workplaces: whether today’s offices have the connectivity, resilience and digital infrastructure required to support AI-enabled work.
• Data centres and digital infrastructure: how growing demand for compute, connectivity and data processing is creating new property requirements and influencing business location decisions.

Coming in September: further analysis of AI adoption in sectors including retail, alongside the broader implications for real estate strategy, investment decisions and the future use of space.

Other reads

Draig Therapeutics, founded in 2024 through a partnership between Cardiff University and SV Health Investors, is a Wales-based clinical-stage company that is developing treatments for neuropsychiatric disorders. The British Business Bank has invested in its $65 million Series B round.

Applied Computing, the UK AI company developing foundation models for energy operators, has raised $20 million and opened an office in Houston.

Valarian, a UK sovereign-infrastructure business building control systems for high-consequence and AI-enabled operations, has raised $50 million in a Series A led by New Enterprise Associates.

A new UK-Switzerland trade deal locks in the UK’s existing ten-year period of regulatory data protection for pharmaceutical companies, giving drug developers greater certainty that competitors cannot rely on their clinical trial data to bring lower-cost alternatives to market during that period.

The mayor of London published the new draft London plan. It includes plans to identify land for industries such as AI, life sciences and data centres.