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Good for now

Stephanie Smith welcomes the chancellor’s announcement on research but still has some questions

The opening of the chancellor’s presentation on the spending review this week made for sobering reading. With the Office for Budget Responsibility forecasting an 11 per cent contraction in the UK economy this year, and unemployment expected to rise to 7.5 per cent in 2021, few could have predicted R&D might come out on top.

Many in the sector will therefore have been pleased to see Wednesday’s announced outcomes for research. The headlines indicate government will invest a total of £14.6bn in R&D in 2021-22, £11.1bn of which will go to UKRI.

Holding its nerve

This is good news. We shouldn’t be surprised that the government has backed R&D, as research and innovation should play a key role in helping to mitigate the risks of long-term economic scarring. R&D has, time and again, shown itself to be a driver of innovation and productivity, as well as a good return on investment. But in light of the stark headlines, it was good to see the government hold its nerve.

The three-year settlement for UKRI’s ‘core’ budgets and the national academies is welcome news, with the spending review report stating this will mean an average increase of around £400m a year for these budgets over the next three years.

This includes the budgets for the research councils and Research England, which should mean a much-needed uplift in quality-related funding and better coverage of the true cost of research council grants—both essential if R&D is to be put on a sustainable footing going forward.

R&D is given a further boost by the uplift in defence spending, as well as with the National Institute for Health Research having its budget protected for next year—not a given when pressure on the NHS has never been higher.

The long-term certainty will be welcome to business investors too—particularly the overseas investors responsible for 53 per cent of private R&D investment in the UK.

This should give the private sector the confidence to enter into the longer-term partnerships so often necessary for R&D, and which will be crucial for the recovery.

While Innovate UK has been given a one-year roll-over in spending, 2021 could still see significant uplifts in its budget once firmer decisions are made on where to direct innovation spending. With the full comprehensive spending review expected next year, this means there is still plenty to play for in 2021, and the sector will need to avoid complacency here. The community will certainly be under pressure to show how investments made over the year are already leading to positive results—a real challenge in R&D where timelines to impact can be long.

What’s missing?

As always, some questions remain. What stood out for many was what wasn’t included in Wednesday’s announcements. The spending review is noticeably silent on what planned R&D uplifts will mean in the context of European funding. Whether the UK associates to Horizon Europe, or seeks a domestic alternative, the funding for these options is yet to be set out.

Our understanding is that the announcements made this week aren’t meant to cover European programmes. Given the potential size of the UK’s contribution to Horizon Europe, or the size of a potential Discovery Fund plus third country access to Horizon, we hope this is the case. If it isn’t, it could mean very significant cuts to other areas of R&D investment, undermining the government’s recommitment to 2.4 per cent of GDP going on research—although the commitment to investing £22bn in R&D was also noticeably absent.

University funding

The other thing we need to remember is that research in universities doesn’t happen in a vacuum, and there are wider questions about the sustainability of university funding that were not addressed in the spending review.

Research has long been funded below full economic cost, and the Covid-19 crisis has highlighted the fragility of the other funding streams used to make up the difference, including international tuition fee income, events and other commercial activity. With the latest OfS figures showing an ever-widening gap in funding for undergraduate courses, and a further delay in the government’s response to the Augar Review likely, it’s crucial the sector keeps making the case for a sustainable settlement for teaching if universities are to be able to deliver on R&D.

Despite these questions, we should welcome the government reaffirming its commitment to UK science in the spending review at a time when much of the focus is on dealing with the immediate effects of the pandemic.

Our task now is to build on this by underlining the critical role research and innovation can play in tackling the biggest challenges facing the UK—beating Covid-19, kickstarting the recovery, and creating a greener, more productive economy—ahead of the full review expected next year.

Stephanie Smith is head of policy (research and international) at the Russell Group