During his rapid rise to the top of government, new Chancellor of the Exchequer Rishi Sunak likely never expected to begin his first Budget by setting out the UK Government’s financial response to the coronavirus (COVID-19) pandemic.
With the Government initially opting not to impose ‘lockdown’ measures as in other affected countries, the Chancellor announced a £30 billion stimulus package including £12 billion for public services, individuals and businesses affected by COVID-19. In addition, a £5 billion COVID-19 response fund will support the NHS and other public services to meet increased strain on resources.
Claiming that the UK’s future economic success will be ‘rooted in innovation and cutting-edge technology’, the Budget sets out plans to increase public R&D investment to £22 billion per year by 2024-25. Described by the Chancellor as ‘the largest and fastest ever expansion in support of researchers and innovative businesses’, this new investment is intended to 'cement the UK’s world-leading position in science and technologies'. Direct support for R&D will rise to 0.8% of GDP, placing the UK among the top quarter of OECD nations and ahead of the USA, Japan, France and China.
One of the most eye-catching measures in the Budget was confirmation of plans (initially proposed in the 2019 Conservative general election manifesto) to invest £800 million over five years in a new blue-skies funding agency focusing on high-risk, high-payoff research. Modelled on the US Advanced Research Projects Agency (ARPA), the concept is to provide funding for projects with a potentially high likelihood of failure and that are outside the main priorities of the government of the day.
The move was welcomed by Jim McDonald, president of the Royal Academy of Engineering, who stated: ‘Radical, out-of-the-box thinking, if properly funded and executed, could boost local economies, create new and sustainable jobs and address global challenges, while creating new opportunities to improve people’s lives in every part of the UK.’
Further large-scale investments came with the allocation of an additional £400 million in 2020-21 for world-leading research, infrastructure and equipment at research institutes and universities across the UK, particularly in basic research and physical sciences. An additional £300 million will also be allocated to experimental mathematical research, including funding for PhD programmes and fellowships, over the next five years.
Acknowledging the reality that half of research and development spending currently goes to London, the South East and the East of England, Mr Sunak used Budget 2020 to highlight the Government's intention to progress with a rebalancing agenda. Lacking universal consensus within academia, opponents view a rebalancing of research investment towards the regions as a move away from excellence. However, the Government appears committed to ‘funding going to brilliant universities around the country’. Deciding on the right mechanisms to achieve rebalancing will be a key future debate. The Budget report states: 'At the [Spending Review], the government will examine how R&D funding as a whole can best be distributed across the country to help level up every region and nation of the country.’
Levelling up regional innovation capability and networks outside of the South East through making the most of knowledge assets (intellectual property, tech, data and other intangibles) was also mentioned in the Budget and will be the subject of a forthcoming report. The Government's intention is to unlock more value from these assets and support innovation and productivity. Budget 2020 announced that the Government will create a fund to invest in innovative public sector ideas and a new unit to scout for and develop these opportunities.
Pioneering carbon capture and storage (CCS) plants will also be established by the Government in at least two UK sites, one by the mid-2020s and one by 2030. Supported by the creation of a new £800 million CCS Infrastructure Fund, Mr Sunak said in his speech that 'The new clusters will create up to 6,000 high skill, high wage, low carbon jobs in areas like Teesside, Humberside, Merseyside, or St Fergus in Scotland.’ Budgets for these clusters are expected to be finalised at the Comprehensive Spending Review. To ensure the UK is at the forefront of new decarbonisation technologies, the Government will also at least double the size of the Energy Innovation Programme.
The Government also needs to unlock private investment in order to achieve its target of investing 2.4% of GDP expenditure on R&I. To this end, it has allocated £900 million in grants for businesses working in high-potential technology and sectors, as well as an additional £200 million for the British Business Bank to support large-scale venture growth funds investing in life sciences companies.
Individual institutions will also benefit from a funding boost. A total of £80 million will be shared between leading institutes in London, including the London School of Hygiene and Tropical Medicine, the Royal College of Art and the Institute of Cancer Research. £180 million will be allocated to establish a new Collections, Research and Digitisation Centre for the Natural History Museum at Harwell Science, Technology and Innovation Campus in Oxfordshire. £1.4 billion will be invested over 10 years in the animal health science infrastructure at Weybridge, while up to £22 million will (subject to business case) be allocated to support research and innovation in the steel and metals sector through the Materials Processing Institute.
Finally, addressing national defence innovation, the Chancellor announced that £100 million will be allocated to defence R&D, including funding for cutting-edge technology in aviation and space propulsion, while an additional £50 million will be allocated to the National Security Strategic Investment Fund (NSSIF). The NSSIF will also be expanded to enable it to make direct investments, alongside private sector co-investors, into companies with the advanced technologies capable of boosting the UK’s longer term national and economic security.
Reaction to Budget 2020 from the research sector seems to be that cash has been splashed, which is welcomed but there is also concern over how and where that cash is spent - and what this means for the future of science in the UK.
Under normal circumstances, a new government announcing plans to boost R&D investment to £22 billion per year within five years would dominate the research sector news cycle. But with Rishi Sunak's first Budget overshadowed by the coronavirus pandemic, it remains to be seen if the Government will be able to deliver on its pledges.
The acid test for the Government's commitment to R&D investment is likely to come with this summer's Comprehensive Spending Review. If the Treasury announces departmental spending that can deliver on the promises of the Budget, then the UK research sector finally may be able to begin planning its post-Brexit future.
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