Record £40bn R&D budget

C&I Issue 4, 2022

Read time: 3-4 mins

Maria Burke

In March 2022, the UK Department for Business, Energy and Industrial Strategy (BEIS) announced how it will allocate its largest ever R&D budget – £39.8bn – over the next three years. UK Research & Innovation (UKRI) has also published its first strategy since it was set up four years ago.

But the news came amid warnings even a 6%/year rise in UKRI budget could likely be outpaced by inflation, at least in the immediate term. ‘The erosion of buying power will be felt across these allocations, making it harder to deliver the scale of transformation desired,’ says Joe Kiely of the Campaign for Science and Engineering (CaSE). Following the Chancellor’s Spring Statement, CaSE is continuing to call for further measures to protect the government’s ambitions for R&D from losing steam. While the government reiterated its ambitious targets for overall public investment in R&D, CaSE warns that progress risks being blown off course by rising inflation and a worsening economy. However, it did welcome reforms to the R&D tax system, such as specific measures on tax relief for overseas R&D activity.

Meanwhile, James Wilsdon, Professor of Research Policy at the University of Sheffield, UK, points out the UKRI has ‘limited scope’ for any big changes without imposing cuts on individual councils or core programmes because most of the extra cash is going to Innovate UK. But it could end up with the ‘double-edged sword’ of a big budget boost and the complex task of reassembling ‘the broken jigsaw of UK-EU collaboration’ if it becomes responsible for the money set aside for Horizon Europe – if the UK’s bid for association fails. UKRI could also end up playing a central role in administering successor programmes to the recently closed Global Challenges and Newton Funds, part of the UK’s Official Development Assistance (ODA) commitment, he notes.

While the headline figures are good, the devil is in the details, warns John Womersley, former Chief Executive, Science and Technology Facilities Council. ‘Scientists are waiting to see how individual council budgets within UKRI will fare and especially whether the core research funding lines that support university-based research will increase at the same rate. Researchers are also becoming concerned that these increases will be eaten up by rapidly rising inflation.’

Overall, the BEIS announcement means investment in R&D spending will increase by £5bn to £20bn/year by 2024-2025, a 33% increase in spending over the current parliament. The allocations reflect the government’s Innovation Strategy and support its target of R&D spend reaching 2.4% of GDP by 2027.

‘In this country, science and business have existed in separate spheres,’ says Business Secretary Kwasi Kwarteng. ‘I am adamant this must change.’

UKRI will receive its highest ever level of funding: over £25bn across the next three years, reaching over £8.8bn in 2024-2025, a rate of growth of around 6%/year. This includes an increase in funding for Innovate UK, which supports business-led innovations, by 66% to £1.1bn in 2024-2025.

The BEIS plan also includes full funding for EU research programmes, allocating £6.8bn to support the UK’s association with Horizon Europe, Euratom Research & Training, and Fusion for Energy. If the UK fails to associate with Horizon Europe, this funding will go to government R&D programmes.

The new Advanced Research and Invention Agency (ARIA), which aims to support high-risk, high-reward research, will receive £475m during this period, supplemented by £300m in 2025-26, bringing total investment to £800m. However, ARIA has been left without a Chief Executive after Peter Highnam, currently deputy director of the US Defense Advanced Research Projects Agency, decided not to take up the post.

Wilsdon describes Highnam’s exit as a ‘serious blow’ and notes the ARIA budget is coming onstream more slowly than planned.

On a more positive note, Kiely believes commitments to fund European programmes signals the government’s desire to get Horizon Europe association over the line and rolling over its unspent budget from 2021/22 ‘significantly eases the path’.

Meanwhile, UKRI’s five-year strategy is based on four principles for change - diversity, connectivity, resilience and engagement – applied to six objectives relating to people and careers; places; ideas; innovation and impacts; and underpinned by a strong organisation. Priorities include making the UK the most attractive destination for talented people; strengthening clusters and partnerships; incentivising multi- and interdisciplinary working; and delivering the opportunities needed to boost private sector investment.

Detailed plans will be published later in 2022 in UKRI’s Corporate Plan and the Strategic Delivery Plans of its nine Research Councils.

Wilsdon calls the strategy ‘rich and impressive’, reflecting a renewed confidence and clarity of vision underpinned by greater certainty over its budget. It emphasises that achieving the 2.4% of GDP target will require extra public investment to attract more than double that in business investment – a ‘huge task’.

‘Now UKRI’s strategy is out, and we have the overall BEIS allocations, the next important step will be the allocation of budgets across UKRI’s component parts – which will reveal the extent to which the aspirations of the strategy are backed up by hard cash,’ he adds.

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