The government has chosen to back research and development – now it’s time to progress some priorities

Sarah Stevens suggests three areas of focus for the government's historic commitment to R&D spending

Sarah Stevens is Director of Policy at the Russell Group.

The 2021 spending review outcome represented a significant win for the UK’s research community. But as we enter 2022, although we have confirmation on the headline investment for research and development (R&D), we still don’t know how this will translate into funding for universities and researchers.

Against a uniquely challenging fiscal backdrop, the government chose to back R&D as critical to the country’s future economic success. As a result, public R&D investment will increase to record levels: £20bn by 2024-25. Although this fell short of the original commitment to invest £22bn by the same date, it still represents a historic increase of around a quarter in real terms over the spending review period.

Indeed, rather than back-loading the spending until the end of this parliament, funding for UK research will start increasing immediately followed by a very significant bump in 2023-24 – something the Russell Group and others pushed hard for ahead of the spending review.

Deferring funding increases until the end of the review period might have saved the Treasury money in the short term, but it would have undermined the confidence of businesses who invest in research making them less likely to do so. This would mean fewer projects being funded and less economic or social benefit for the country.

The government has ringfenced the core research budget and set out plans for it to rise from £4.8bn in 2021-22 to £5.9bn in 2024-25. It has also set aside funding for Horizon Europe association or an alternative scheme. But there is still a large unallocated funding pot in the BEIS budget (£5.1bn by 2024-25) that will be subject to multiple demands to support government priorities like ARIA or to augment other funding pots including basic research.

Other government departments such as Defence, Health and Environment have seen their research budgets rise too and by 2024-25 their slice of public R&D funding will have increased quite substantially. This presents an opportunity for the HE sector if it can show it can be responsive to the research needs of a range of other departments alongside BEIS.

Priorities for investment

Science minister George Freeman helpfully gave us an insight into his priorities for the year on social media last week. They represent a significant to do list, so some help may be needed to focus down on the issues that will have the most impact.

This isn’t going to be easy, and even with an increased budget, ministers, advisers and officials will be wrestling with big questions about how best to maximise the impact of every pound spent on R&D. They will also have to balance pressure to deliver short-term economic returns with evidence that longer-term investments in basic research are crucial to addressing global challenges like pandemics, public health issues and climate change – not to mention the government’s science superpower and levelling up ambitions.

Everyone wants to see good returns in the short-term, but ultimately the future economy is likely to be underpinned by investments in basic research that may take 5, 10 or 20 years to find their application. So here are three themes which I believe should underpin the government’s decision making on where to invest.

Revitalising regional economies

It was particularly pleasing to see George Freeman identify R&D clusters as a way for science and innovation to help with levelling up. Universities are central to the UK’s innovation economies and the vast majority of Russell Group universities are linked to many of the innovation clusters in his post.

Through their work to commercialise their research, support spin-outs and start-ups and attract external investment into their regions, universities are creating vibrant new communities, accompanied by new infrastructure, homes, and high-value jobs. The University of Manchester’s new innovation district ID Manchester will add £800m gross value added to the regional economy every year and the University of Sheffield is developing an innovation district around Doncaster Sheffield airport with the potential to create 35,000 new jobs and 3,000 new homes.

Scaling up emerging innovation clusters centred around the UK’s universities should form a key part of the government’s flagship levelling up policy agenda. This could be done with targeted support by boosting existing schemes like the Higher Education Innovation Fund and the UK Research Partnership Investment Fund, both very successful in leveraging private investment and supporting university-business collaboration. Gaps in venture capital investment especially outside London and the south east could also be at least partially addressed through a new deep-tech university seed fund.

Supporting basic research

A substantial uplift to basic research funding is needed to deliver on the government’s priorities. Long-term investment in R&D, via quality related (QR) research funding, has enabled the research base to respond to new threats and challenges. The rapid pace of progress in vaccine development and treatment of Covid-19, for example, was only possible because universities could tap into established basic research built up over decades and redirect existing resources at pace.

Despite this, since 2010 QR funding has declined by 17 per cent in real terms. Indeed, the balance of funding between QR and Research Council funding has fallen from 80p in the pound in 2007, to 64p in the pound in 2021-22. To safeguard the UK’s future resilience and agility in the face of significant challenges such as climate change, health emergencies and other disruptive and unpredictable forces, QR funding – and its equivalents in the devolved nations – should increase substantially, by at least 20 per cent from 2022-23 to bring the funding back to 2010 levels.

Improving research sustainability and culture

While an increased budget will inevitably lead to a focus on the finances, no-one should overlook the importance of people to the UK’s ambitions for science, so it was good to see George Freeman highlighting people and culture in his list of priorities. The government’s People and Culture Strategy estimates a need for an additional 150,000 people in the UK R&D workforce by 2030.

But the number of postgraduate research (PGR) students enrolling in UK universities has been pretty much flat-lining since 2010. Many more PGR students will need to be recruited to form the pipeline of the future R&D workforce. To do this, the delivery of PGR training must be placed on a more sustainable financial footing. Currently funders cover less than half the cost of PGR training – just 45.6 per cent – so universities must cover the deficit drawing on other sources of funding like international student fees and business conference hire, which still remain uncertain as the pandemic continues. As the shortfall in funding for PGR training increases with more students entering universities, this model will become unsustainable.

More effort by universities and funders will also be needed to improve the retention of research workers post-PhD. Improving career stability and progression, especially for early career researchers, will be key to retaining talent within the R&D system. This should be a priority for action within the proposed “New Deal” for postgraduate researchers which UKRI is due to publish soon.

More generally, research council funding has become less sustainable over the past decade, with the average grant now covering only 71 per cent of the full economic cost of research and too many grant rounds having very low success rates. Addressing this R&D sustainability challenge will be crucial to ensuring the UK’s research base remains internationally competitive, producing world-leading research and attracting and retaining the best talent at all career stages.

The scale and scope of the priorities set out last week shows the importance that government is placing on R&D and its potential impact. It also suggests that 2022 could be a big year for the sector. So it is vital that we work with government to help it maximise the impact of every pound spent on R&D and focus on the priorities that will deliver the biggest benefit for individuals across the country and the economy as a whole.

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