Never before in the history of innovation policy has the demise of a three year old government department received such press attention.
The collapse of DSIT into a new Department of Business, Innovation, Science and Trade has been described as “clearly a bad thing,” a “big mistake” and an “act of national self-harm” – with the consequences being that the department’s work will become a “shambles”, a “small cog in a large DBT wheel” and other equally apocalyptic scenarios.
These predictions aren’t impossible, but they are certainly on the gloomier side of possibilities. Is the government really possessed of such unbelievable technical execution and élan that redrawing the lines on an organogram is equivalent to “getting rid of the department of the future”? The state is surely not simultaneously so efficient that it can relegate billions of pounds of work to the sidelines overnight, and so inefficient it cannot hold science and innovation as an equal partner within a business department.
The Department for Science, Innovation and Technology (DSIT) came into existence in 2023. It was formed to drive Prime Minister Rishi Sunak’s science and technology agenda with a stated focus on pursuing cutting-edge technologies and creating well paying jobs.
From 2016 to 2023 these functions were held by the Department for Business, Energy, and Industrial Strategy which was created to work with businesses and further the UK’s science ambitions. Prior to this there was the Department for Business, Innovation and Skills, once led by disgraced former MP Peter Mandelson, and even further back there was a brief flirtation with a Department for Innovation, Universities and Skills which only lasted from 2007 to 2009. In an era of much greater stability there was the Department for Trade and Industry from 1970 to 2007, and from 1964 the Ministry of Technology which gave shape to Harold Wilson’s dreams of a worker-led scientific revolution.
Clearly, changing up the government machinery around innovation is not a new thing – moving bits of the innovation portfolio between departments and dropping in new departments has been fashionable for a decade or more. It shouldn’t be a surprise that a pro-business Prime Minister has signalled that he will do pro-business things. The question is whether this reshuffle will have any appreciable impact on research and innovation.
Consensus politics
Looking back there has been a stable consensus that even in times of fiscal restraint it is important to continue funding research, development and innovation. There is an issue of the comparability of figures between years owing to changes in accounting methodologies, but broadly speaking government expenditure on R&D has increased year-on-year since 2016 (excluding a Covid-related slump in 2021). During much of this period the innovation portfolio was part of a larger business department.
A fair question is whether there would have been a less generous settlement in 2023 had DSIT not existed. This seems unlikely. The groundwork for the post-2023 settlement had already been laid by the time the new department came into existence. The 2025–26 budget, which was the basis for subsequent spending decisions, was set in autumn 2024. The autumn 2024 settlement in turn had built on the £750m in-year boost to science spending announced in the 2023 Autumn Statement. The momentum for investment was already building as DSIT found its feet. Additional spending in emerging technologies such as AI would have been necessary in any departmental configuration. Some of the additional funding was for the reorganisation of DSIT itself, which hardly counts as science spending.
Money isn’t the only marker of success, but it represents an expression of faith in the system. As far as faith goes, UKRI’s record settlement is a good show of confidence. For the university sector it is arguably of greater consequence that its key research funder continues to be backed by the government. Even in the face of old debates, like whether culture should have a prominent role in REF, and new problems like STFC’s overspending, there is no threat, or even hint of a threat, of reducing UKRI funding.
Who leads what
It is understandable why the tech sector, who have made the most noise about last week’s change, are upset to lose their special AI department – but university research did not always seem to be at the centre of DSIT’s work. If the concern is that innovation becomes a smaller piece of a bigger pie, we should note that it was already fighting for space against tech skills programmes, telecoms modernisation, cyberresilience, gigabit contracts, protecting children online, and data regulation (to name only some of the department’s announcements in July).
Although the department’s leadership were relatively high profile, it is hard to say that Peter Kyle or Liz Kendall’s political ambitions were in research and innovation, particularly when it came to universities. It is difficult to recall a single instance where either fundamentally moved the dial on any big research decision, strategy, or plan which involved universities. Kendall clearly had an enthusiasm for the science workforce, in particular women’s participation in it. Kyle had an enthusiasm for AI, disclosing his personal use of it through an embarrassing FOI. It’s just not obvious how their role provided any more or less protection for research than a joined up business department.
At the time of writing, it’s not completely clear how the different parts of what was Patrick Vallance’s brief will find new homes in ministerial portfolios, though we do know that the newly minted minister for AI, Kanishka Narayan, will attend cabinet. It isn’t that AI isn’t important – but it is a part of the puzzle while research, development and innovation are the whole jigsaw. It is confusing that some parts of DSIT now don’t have an obvious home – as Ed Vaizey has pointed out AI is now the responsibility of at least four different departments – but the previous system had silos as well just in different places.
Innovation had a role in economic growth but its time horizons are different to the Treasury’s. The industrial strategy sat with the Department for Business and Trade while shaping much of DSIT’s work. And all of the sector’s dreams about a highly skilled workforce were not entirely within DSIT’s gift, given how many of the levers were held by DfE, DWP and others. Silos and duplication are inevitable in government. The only hope is that the results the bureaucracy produces are worth the complication that comes with it.
Against nostalgia
The good old days were never that good and the future is never as bad as it seems. For now, it would be nice to see some kind of clearly articulated vision around why going through this quite extensive organisational rearrangement, which will take attention away from important things like curing disease and fixing the economy, is worthwhile.
Andy Burnham might want to use his new supercharged department to, for example, work out what good growth in every postcode with innovation at its heart actually means, and what trade-offs are involved. It would be an ideal opportunity to look again at how infrastructure spending can support the diffusion of research and innovation, particularly as universities are desperately short of any match funding.
And if the government is going to make some sensible decisions on economic growth and research, it could use now as the opportunity to reevaluate every single freeport in the country (and reinvest the money and the cost of the displaced activity into proper devolved funding settlements), rip up the R&D tax regime and retool it to support innovative activity, and boost government capacity for attracting foreign investment.
Moving the pieces of government around is neither a panacea nor a death sentence for a sector. There is a threat that some of the things the sector believes to be important will be swept up in the bigger machine of business. On the other hand, given the sector has repeatedly said its work is about making the economy stronger, now could be the ultimate opportunity to show this is really the case.
