THE North-East's historical place as one of the most inventive regions not only in the UK but in the world is in decline and steps need to be taken to address it, Business Editor Owen McAteer discovers.

In a warning shot James Hayton, Newcastle University Business School's David Goldman Professor of Innovation and Enterprise, said that while historically the North East has been a hot bed for innovative activity, recent surveys have shown a decline.

Prof Hayton, who will address the region's business leaders on innovation tonight (January 24), believed care should be taken not to allow this decline to continue.

Figures from the European Patent Office (EPO) show that there were just 85 patent applications made in the region in 2010, the lowest of any English region.

It is worth remembering that the North-East is where George Stephenson gave birth to the world's railways in Darlington, where Sunderland's Joseph Swan invented the light bulb, Newcastle born Charles Merz developed the forerunner of the National Grid, at Wallsend and Stockton's John Walker invented the match.

Much innovation has also started in the region. In 1925 Francis Thomas Bacon joined one of the North-East's largest employers, steam turbine builder CA Parsons, in Newcastle, as an apprentice and began experimenting with fuel cells.

His work was eventually to play an integral role in putting Apollo 11 and US astronaut Neil Armstrong on the moon in 1969.

Prof Hayton said: "There is a huge history that goes back to the industrial era. In the last surveys a few years ago we were seen on the leaderboard of innovation amongst the leading areas in the country and we have fallen out of that.

"There is a decline in innovativeness and that is the source of growth.

"We expect the fastest growing firms to grow fast because they are doing something new.

"There is something afoot. I suspect it is research costs and we have also seen companies move out of the region. How do we encourage them to stay?"

The decline was despite the fact that much innovation usually comes from the manufacturing sector, a strong part of the region's economy.

Prof Hayton said: "The research on where jobs are coming from makes it clear they are coming from these middle sized firms across the country and we know the fast growth firms are in manufacturing and services with most manufacturing in the north."

"The North East is home to a disproportionate share of the country's manufacturing businesses, so we should also expect to see a larger share of those high-growth mid-sized ventures that serve as the engine for economic renewal," he added.

Speaking alongside prolific inventor Trevor Baylis, who shot to fame when he created the clockwork radio, Prof Hayton's talk tonight on the Science of Innovation will focus on how intangible assets such as culture, human capital and human resource management practices impact on the innovation process.

Prof Hayton compared maintaining the region's capacity for innovation to exercising the body, with continued investment needed for optimum health.

So how do businesses find time and resource to invest in innovation when they are already struggling in a difficult economic climate.

Prof Hayton said: "The challenge for business is to carve out time and resource to think about what comes next.

"The challenge with doing innovation and being entrepreneurial is it takes time and money, it takes management attention.

"In a tough economy you probably don't have extra bodies and cash around to develop these new ideas, everybody is working very hard to do a good job of their main business and don't have time to take their eye off that.

"In a recent workshop at Newcastle University Business School, corporate participants had an opportunity to evaluate their own organisational environments for supporting entrepreneurship.

"The clear challenge faced by local companies is in being able to balance the execution of existing business objectives while simultaneously promoting exploration and risk-taking."

However Prof Hayton said it was not necessarily the management team that needed to be involved in driving innovation.

He said: "It could be people further down the hierarchy. It is about making sure they are enpowered to come up with the next big thing."

Another key concern of businesses of course is money and Prof Hayton believed it should be made easier for them to bid for finance provided by sources such as the Regional Growth Fund or the European Regional Development Fund.

He said: "There is a lot of time and effort required to develop an RGF or ERDF bid and a big up-front investment in developing these bids and I think some companies may be at a disadvantage in putting these through.

"It is not my area of expertise but I have advised on one or two bids and seen how much work goes in and there are costs around it, it takes money to make money.

"Simplifying these procedures would help medium sized enterprises, a lot of the money goes to the bigger ventures.

"I am not sure what role the Local Enterprise Partnerships will play in this in the future, maybe there is a role for them or another organisation to serve as a helping hand for developing the bids."

Prof Hayton believed that firms such as Nissan showed the importance of having innovative firms located in the region.

The Japanese car firm is to start making the Leaf electric car at its Sunderland plant from next year.

Prof Hayton said: "There is an eco system that builds up around a large firm like Nissan, they have smaller, specialised suppliers that are encouraged to relocate and set up here."

The region's drive to become a hub for firms working in offshore wind and carbon capture could also have benefits for the region, Prof Hayton believed.

"You do tend to get that magnetic effect," he added.

And having innovative firms in such industries played another important part in the region's innovativeness by stopping a brain drain.

"We want to be a a region where people move to, not from so having industry clusters like that. Because they are exciting and new people are attracted to working on them.

"Hopefully it will attract people to the region, they will come to the university and stay."

Tonight's talk The Science of Innovation is being held by Newcastle Science City to mark Innovation Month.

Aimed at company leaders, managers and business owners in the North East, the event is free to attend and will take place at the Newcastle City Library from 6.30pm to 9pm.

To find out more log on to www.thescienceof.co.uk