The Department for Science, Innovation and Technology (DSIT) is here to stay. Peter Kyle is now charge along with the surprisingly announced, but warmly welcomed, former Government Chief Scientific Adviser Patrick Vallance.
DSIT could be in for another busy few years. The new government is aiming for 3% of GDP to be invested in R&D, its defence policy is reliant on advanced research, and its Plan to Power Up Britain involves spending on R&D infrastructure, long-term funding settlements, and some configuration of devolved research spending.
New rules
There is no shortage of opportunities for the department but there is a shortage of cash. Chancellor Rachel Reeves has made a commitment that:
Our fiscal rules are non-negotiable and will apply to every decision taken by a Labour government. This means that the current budget must move into balance, so that day-to-day costs are met by revenues and debt must be falling as a share of the economy by the fifth year of the forecast.
This sounds deceptively similar to the previous administration’s fiscal rules but as outlined in Reeves’ Mais Lecture speech there is one important caveat
[…]our fiscal rules differ from the government’s. Their borrowing rule, which targets the overall deficit rather than the current deficit, creates a clear incentive to cut investment that will have long-run benefits for short-term gains. I reject that approach, and that is why our borrowing rule targets day-to-day spending.
In short, a budget deficit is the difference between total spending in a year and total receipts. The current deficit includes all receipts and spending but, crucially unlike the overall deficit, excludes spending on net-investment. Net investments, unlike day to day spending, create long-term fixed assets that improve economic productivity. This includes things like roads, and bridges, and some kinds of R&D spending.
This difference is linguistic sleight of hand that allows Labour to simultaneously target reducing day to day government spending while also making long-term investment decisions. Crudely, imagine reducing your electric bill by £100 a year and deciding to put £100 into a ten year savings account. You are no better off immediately but future you is.
Jam today
In a world of seemingly endless challenges and opportunities here is a starter for five of some relatively obvious, sort-of-fiscially-compliant things Labour might do. The focus here is not to address the whole myriad of things Labour could do but to look at what they may do based on their existing announcements and previous government policy.
Number one. Research bureaucracy is the nightmare wrapped in a puzzle inside a riddle with a form to fill in to know what kind of puzzle that a researcher is dealing with. In response to the Tickell review of research bureaucracy the government mandated UKRI to have “due regard for reducing research bureaucracy in all new initiatives and programmes it funds.”
The problem with research bureaucracy is that it never really starts and it never really ends. Like sand, forms, processes, sign offs, and oversights, slowly creep into the research system.
On the back of this mandate the government should commit to periodically updating how it has reduced research bureaucracy one step, process, or form at a time. Hand in hand with UKRI they should use the basis of the Tickell review to continually make bureaucracy changes and every so often update the sector on how they are making researcher’s lives easier. Building a momentum on reform and encouraging universities to follow their example.
Jam tomorrow?
Bureaucracy isn’t inherently good or bad but its inherent inefficiencies must achieve wider goods like fairness, or equality, or proper scrutiny, to be worthwhile. Bad bureaucracy is where multiple processes or programmes overlap and add marginal or no additional value. In the previous government’s place-based research agenda there was some confusion.
Freeports were the last government’s attempts to provide a range of tax reliefs and incentives to encourage investment. Investment zones, while focussed on more specific sectors, also provide a range of tax reliefs to encourage business investment. Confusingly, freeports aren’t only limited to ports which means that regions can have freeports and investment zones with similar sets of incentives in close geographical proximity.
The argument for getting rid of both investment zones and freeports is that their historic success is mixed and they can displace existing activity. However, they are both too early in this iteration to know their impacts and they have undoubtedly catalysed some new partnerships with universities and businesses in R&D. Universities have now invested significant time and resources into making these initiatives work and they should be encouraged to keep this kind of investment going.
In the same way Labour has ruled out radically altering R&D tax credits it should commit early on to the future of these initiatives so businesses and universities can plan. It may be that the government wishes to tweak some of the tax incentives or reliefs but the basis of the programmes, on balance, should be given the chance to succeed.
Planning
A frequent criticism of the last government’s research policy was that there was simply too much of it all of the time. The mix of moonshots, place based policy, reviews, and new initiatives, gave a sense of energy but not a kind of certainty that allows universities and businesses to plan.
There is no greater kind of certainty than physically building permanent R&D infrastructure. It is also desperately needed with the UK short of lab space.
While the UK has a mixed record of successful public investment programmes the government has made infrastructure development the cornerstone of its economic renewal project. One tool it has before it gets into reforming planning policy is the designation of nationally significant infrastructure projects (NSIPs.) These kinds of projects require significantly less local authority sign off and approval.
Tomorrow, the government could lay the necessary statutory instrument to add laboratories to the list of allowable NSIPs, reduce the time for application and planning permissions, thereby encouraging investment.
The other area of certainty that the research ecosystem needs is financial certainty. The government has committed to funding major research bodies over a ten-year period to give them greater financial certainty to allow them to plan more effectively. Labour could solidify this commitment in its first fiscal event while establishing a criteria that allows more organisations to apply to be funded in this way. This will mean a great diversity of funding with organisations like ARIA patiently funded over a decade to allow them to experiment while more rapid less experimental research may be more effectively funded in year.
Clarity
Finally, aside from any changing of structures, regulations, or funding it may make the government’s early R&D announcements will set the tone for the rest of their tenure.
Already, there is a mosaic of policies including an industrial strategy, the vestiges of levelling up, economic growth, defence, upskilling the labour force, amongst other policies that run through R&D. In these policies there are implied trade offs; REF rewards excellence wherever it is which often, but does not always, align with a regional growth strategy. International collaboration is the cornerstone of UK research but there is a media scepticism that this is a security risk. Levelling up and skills might be through R&D in the foundational economy while the UK also chases the most experimental frontier pushing research. Improving research culture will need more data and checks and balances but funders, universities, and government, also want less research bureaucracy.
All of these aims are achievable but it is a high-wire balancing act to bring universities, businesses, and investors, alongside on a single clear government research strategy with obviously aligned programmes that can achieve policy objectives in a coherent way.
A fifth piece of advice is to focus on getting the overall R&D strategy and framework right and hold-off announcing too much policy too quickly. A few well-timed interventions within a well understood and clear set of expectations, promises, and opportunities, will do more than a large number of eye-catching policy announcements.
