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Spring statement: what is in store for R&D and higher education?

Image: Number 10 [CC BY-NC-ND 2.0], via Flickr

Experts look ahead to the chancellor’s 2022 spring statement

Higher education and research could take a back seat in the chancellor’s spring statement later this month amid the worsening humanitarian situation in Ukraine and mounting financial strain at home.

Following the Comprehensive Spending Review in October, which outlined the government’s longer-term economic priorities, the spring statement was not expected to be as significant an event as it has been in previous years. However, the outbreak of war in Europe has resulted in calls for an increase in defence spending, while rapidly rising inflation in the UK means that chancellor Rishi Sunak (pictured) will have much to contend with when he takes to the podium.

Andrew Westwood, formerly a senior adviser to the Treasury and now professor of government practice at the University of Manchester, told Research Professional News that he expects there to be little on tertiary education when Sunak delivers his statement on 23 March.

“I suspect it’s going to be all about additional defence spending—as it will be for a while—and managing economic fallouts from the Ukraine conflict such as sanctions, pressures on supply chains, trade and so on,” he said. “So less likely to see anything for higher education or much else, I’d say.”

Westwood added that pressure to save money from elsewhere in order to reassess defence spending could see some projects—such as the detail behind the lifelong loan entitlement—“kicked into slightly longer grass”.

Nick Hillman, director of the Higher Education Policy Institute, agrees. “My hunch is that the fact we have just had some big higher education announcements, with live consultations, combined with urgent non-education priorities linked to the global crisis, makes it less likely than usual that there will be much for higher education,” he told us.

Diana Beech, chief executive of the London Higher group and a former adviser to three university and science ministers, said that while the past two spring statements were dominated by the pandemic response, the conditions around this year’s statement were not really any calmer, with “a cost-of-living crisis now to contend with and growing calls to boost humanitarian aid in response to the horrific situation unfolding in Ukraine”.

“This means the chancellor will find himself in the unenviable situation at the despatch box of needing to reduce public debt levels at the same time as providing financial support to those set to be worst affected by domestic price hikes,” she said. “For the higher education sector, against this backdrop, it is unrealistic to expect any big changes.”

Research spending?

Arguably more likely is the prospect of news about research funding. The government has yet to announce funding allocations for UK Research and Innovation, for example, while previous spring statements have allowed for updates on how the government intends to increase R&D funding to the long-established target of 2.4 per cent of GDP by 2027.

At best, universities might hope for “a recommitment to public investment in science and research, as set out in the recent Levelling Up white paper”, Beech said.

“At worst, no new money for tertiary education, and the strategic priorities grant could increase pressure on the Department for Education to justify its proposals on higher education reform, including the reintroduction of student number caps and imposition of minimum eligibility requirements, which are currently open for consultation.”

Daniel Zeichner, MP for Cambridge and chair of the All-Party Parliamentary University Group, told Research Professional News that the spring statement “needs to be clear on future research funding”.

“At the recent announcement in response to Augar, I pressed the secretary of state [for education] on the impact on research of the tightening of university funding, and answer came there none,” he said. “Together with the continuing uncertainty around Horizon Europe association, the government’s 2.4 per cent target is in serious doubt, with all the ramifications that will have for future prosperity across the UK as a whole, and university cities in particular.”

Hillman, however, is not convinced that R&D will get a look in. “While chancellors often find something to announce on research at big fiscal events, the timetable for the Research Excellence Framework could also make this a tiny bit more tricky than normal,” he said.

“There is rarely nothing at all, of course, so I am not saying the chancellor’s red box will necessarily be empty. There might be something for universities that is linked to the government’s wider response to the various health and geopolitical crises or even something arising on the back of Brexit, which continues to affect the research base.

“Any decisions about migration and visas also tend to affect universities—but, overall, I sense we are a little further back in the queue than usual.”

Big calls to make

On 10 March, the Institute for Fiscal Studies published an analysis concluding that households and public services “will be squeezed by higher inflation, the economy rocked by heightened uncertainty, and the public finances buffeted by the fallout from Ukraine” in the coming months.

The IFS says that high inflation could “wipe out at least a quarter” of the real-terms increases to public service spending announced in the spending review.

“If the government were to reflect that in higher public sector pay awards, it would come at an additional cost of around £10 billion, or around £1,750 per worker,” the IFS calculates.

The think tank adds that if the changing outlook for inflation were not reflected in pay awards then the average public sector worker “would see their gross salary reduced by around £1,750 in real terms”.

The chancellor has a number of big calls to make, the IFS says. He can either commit to more spending but have to borrow billions more, or allow a hit to household incomes “bigger than at any time since at least the financial crisis and quite possibly since the 1970s”.

A longer version of this article featured in this morning’s 8am Playbook. For a personal email copy of the Playbook, please fill in this form and add 8am Playbook as the subject. You can unsubscribe at any time.