Innovation funding: what the UK’s £86 billion investment means for West Midlands businesses
Written by Alice Hurst, Innovation Policy Manager at West Midlands Combined Authority
Published: 22 October 2025
The UK Government’s 2025 Spending Review has made a bold commitment to boost innovation - with £86 billion set aside for research and development over the next four years.
For businesses in the West Midlands, this is a real opportunity to get involved, influence investment priorities, and benefit from new models of innovation funding that will shape the future of business growth across the region.
The local innovation partnership fund (LIPF): a new model for regional growth
The Local Innovation Partnership Fund (LIPF) will deliver at least £30 million to the West Midlands - but the real value lies in how the fund will be used.
Instead of a one-size-fits-all approach, this fund will be delivered through co-created strategies that bring together businesses, universities, and local leaders to invest where it matters most.
For businesses, this means:
The fund will focus on sectors where the West Midlands already leads the way - Clean Tech, Health Tech, and Creative Tech - helping to accelerate innovation and growth in these areas.
Funding opportunities available now
The West Midlands has also partnered with Innovate UK to strengthen business-led innovation through a Local Action Plan.
A few current Innovate UK opportunities include:
You can explore more opportunities on the Innovate UK Business Connect and UKRI Funding Finder websites.
Sector-specific investment highlights
The 2025 Spending Review includes targeted investment in areas that play to the West Midlands’ strengths:
- £3bn for Advanced Manufacturing - supporting automotive, aerospace, and materials innovation.
- £2bn for AI and Digital Infrastructure - empowering digital, fintech, and creative tech businesses.
- £600m for Health Data Research - enabling partnerships between med tech firms, the NHS, and research institutions.
- £520m for Life Sciences Manufacturing - helping biotech and pharma companies scale and modernise production.
- £400m per year for Defence Innovation - creating opportunities for R&D in aerospace, security, and advanced engineering.
- £2.9bn per year through the British Business Bank - providing tailored finance for innovative SMEs and scale-ups.
Why this matters for your business
This is a pivotal time for West Midlands businesses to engage, collaborate, and innovate. Whether you’re a start-up, a growing SME, or a sector leader, there are major opportunities to access funding, form strategic partnerships, and help shape the future of innovation in the region.
Get in touch with one of our specialist business growth advisers to find out how you can benefit from upcoming innovation funding and support.
