Now is the time for action on the UK’s R&D spending target

The science base, public and private, needs certainty over how promised funding increases will be spent, says Chris Skidmore

June 9, 2021
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The question of how to meet the government’s target for the UK to spend 2.4 per cent of its GDP on R&D by 2027 has been looming for some time.

Originally set in 2017’s Industrial Strategy White Paper, the pledge was a key theme of my tenure as science and research minister. Back then, R&D spending was about 1.7 per cent, so the road to 2.4 per cent – as I titled my lecture series on the topic – seemed eminently passable. We just needed to raise investment by 0.1 per cent of GDP each year.

Two years on, and in the wake of a devastating pandemic that, ironically, has revealed the utmost importance of investing in science and research, we need not only to double down on 2.4 per cent but to raise our aspirations higher. By the end of the decade, I believe we need to have met the white paper’s ultimate aspiration to reach 3 per cent.

The R&D road map, published last year, was filled with welcome words on transforming research culture, pledging to continue with the research people strategy I announced – after all, without the scientists in place, the extra money won’t have the desired effect in terms of innovation and industrial growth. However, the road map offered more consultations than firm decisions.

What’s needed now is action. By mid-July (11 July, if you’re counting), there will be just 2,000 days until 2027. With the refresh of the Industrial Strategy likely to morph into the Innovation Strategy promised this month, now is the moment of decision.

I still believe we can do it. The commitment to raise public R&D spending to £22 billion upholds the government’s side of the bargain. But the R&D community needs certainty over how the money will be spent. I sweated blood to ensure that the UK associated to Horizon Europe, for instance, yet the annual £2 billion subscription fee should not be paid out of the existing R&D budget.

If I had one recommendation for the Innovation Strategy, it would be to create a UK equivalent of Horizon: a multi-annual, agile research budget that allows for institutions to plan and not to spend time chasing a multiplicity of smaller funding pots. Since leaving office, I have been chairing a Higher Education Commission inquiry into how to level up R&D funding; our evidence sessions have highlighted how the current funding system simply does not work for SMEs or researchers who need to quickly secure partnerships with business or international partners.

While science minister, I was keen to rectify a corrosive trend that had seen R&D investment increase through challenge-based funding, at the expense of quality-related block grants (QR). Case after case convinced me that QR plays a vital role in shaping and building universities’ research projects with industry, providing the flexibility to invest or move funding where required. The announcement of the Advanced Research and Invention Agency (Aria) is welcome, yet to succeed its researchers will need to access existing research infrastructures and public research laboratories. Keeping their lights on is why QR matters and should be increased.

Now is also the time to address the thorny issue of cross-subsidy in universities. If the government implements its intended cuts to the teaching grant for higher-cost humanities subjects, or lowers tuition fees without making up the difference, many post-92s will lose capacity to build research potential. At the very least, the government’s strategic priorities of environmental and medical R&D should be funded at full economic cost.

Meanwhile, using the knowledge exchange framework – the inaugural results of which were recently published – to allocate the £230 million Higher Education Innovation Fund (HEIF) could incentivise universities to scale up their involvement with industry, which HEIF funds. The impact element of the next research excellence framework also needs to be better calibrated to incentivise industry partnerships.

After all, the road to 2.4 per cent is all about leveraging in the necessary private investment – which makes up two-thirds of the total GDP spend. This requires businesses to add more than £17.5 billion a year to their 2017 R&D spend – perhaps the greatest challenge to meeting the target. Historically, UK business spends less than the OECD average on both R&D and staff training and development, highlighting the huge cultural change needed. A recent report highlights that R&D tax credits have not achieved the R&D uptake hoped for; this is why the Treasury review of eligibility for the credits is so important to get right; capital investment and data costs should all be brought into scope.

With the UK hosting the COP26 climate-change conference this year, I passionately believe we should be placing R&D in net-zero technology at the heart of our mission. Boosting our Catapult network by investing in advanced manufacturing research at the same level as Germany’s Fraunhofer system (investing 10 times more) could help direct this programme.

Given the capacity of the north of England and the Midlands to deliver effective applied research, this approach would also further the levelling-up ambition. But it isn’t just about the UK. On the international stage, new partnerships or research funds focused on achieving net zero could really give shape to the UK’s R&D mission. After all, what better way is there to demonstrate why we need to invest in research than to help save the planet?

Chris Skidmore is a Conservative MP and the UK’s former minister for universities, science, research and innovation.


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