Public and non-profit research organisations are a crucial part of the UK’s research and innovation landscape and have played a vital role during the Covid-19 pandemic.
The UK has a diverse research and innovation ecosystem including universities, research-intensive businesses and research institutes. However, ask a university academic about research institutes and you will often hear a vague answer about how “they all do applied research and how the money would be better spent in universities.”
Similarly, scientists in research institutes are just as likely to say that much of the “truly significant research happens in institutes and universities exist mainly to teach.”
Of course, both answers are completely false. But if these views exist within the scientific community, how do we expect government to navigate the research ecosystem and make wise decisions on where to invest?
A good starting point would be an analysis of the whole system and an understanding of why it has arisen in the current form – often a complex combination of national need, historical accident, urgent crisis, plus a smattering of strategy. Diversity, however, in funding, organisation and purpose of our research institutions, has often been a hallmark of the UK’s success as a scientific nation.
Public and non-profit research organisations – including public sector research establishments (PSREs) Research Council institutes, Catapult centres and private non-profit organisations such as institutes and charities – are an essential part of the research ecosystem.
They range from small organisations with very specific functions, such as running scientific infrastructure such as the national synchrotron at Diamond Light Source, to very large organisations like the Environment Agency and the Atomic Weapons Establishment, which both employ over 5,000 members of staff and are located across the UK. Together these organisations deliver substantial benefits to government, the economy and wider society.
However, the diversity of these organisations means that they have not always been considered holistically and cuts to science budgets, mergers, closures, constant changes in governance and a shift to short-term project-based funding, have left the UK’s ecosystem fragmented. Indeed, compared to other countries, we have an unusually low number of public and non-profit research organisations, many of which are struggling financially.
The strategic rationale for organisations in some research areas and not others is not always clear and does not always best reflect current research priorities. If the UK government has ambitions to become a science superpower then public and non-profit research organisations are a vital resource that has to be considered, alongside universities, to achieve this goal.
The Royal Society’s new publication The role of public and non-profit research organisations in the UK research and innovation landscape, explains the distinct role of research institutes, and outlines the policy challenges that, if overcome, could maximise their economic and societal contribution by harnessing research institutes as an engine to drive discovery and innovation.
The government has committed to increase public funding for research and development (R&D) to £22 billion per year by 2024-25 as part of its goal to increase UK investment in R&D to 2.4 per cent of GDP by 2027.
Roughly two thirds of spending on R&D comes from businesses. To reach the 2.4 per cent target, public investment in R&D must leverage private R&D spending. A critical means of achieving this goal is through public and non-profit research organisations. They fulfil a number of functions that can fall in between government, universities and businesses, including carrying out early stage applied research, supporting policy development and developing standards, testing and regulation.
These activities are all essential in crossing the “valley of death” – the gap between research and its application – that often precludes commercial innovation. Many attract private investment themselves and contribute to an environment that attracts further private investors. These activities can also increase the commercialisation of research, making it more accessible to private investors. Increasing public investment in these organisations may therefore help drive innovation and thereby increase productivity.
There is no one size fits all when it comes to funding and operating models for public and non-profit research organisations. Some sit squarely in the public sector, whereas others do not, either culturally or financially. Some rely substantially on commercial contracts, while others rely on funding almost exclusively from the Research Councils.
This means that for some organisations, the absence of stable funding can be a barrier to translation and innovation. In addition, project-based funding is also often only provided at 80 per cent of full economic costing, leaving organisations to find other resources to fund the remaining costs. This has created challenges for many organisations who do not have stable streams of funding they can use to fund the remaining 20 per cent, and hampered their ability to invest in infrastructure and state-of-the-art equipment.
Removing barriers, reducing bureaucracy, and providing long-term stable and strategic funding are therefore important steps that would help realise the full potential of public and non-profit research organisations.
Diversity of funding sources
The government plans to expand its portfolio of funding programmes for research and innovation, which the scientific community has broadly welcomed. It is not yet clear where the proposed UK Advanced Research Projects Agency (ARPA) will fit in the research and innovation landscape, but it would be a mistake to overlook the expertise and capabilities of public and non-profit research organisations in such ambitious projects. These organisations are an important asset which could be used to attract further overseas investment, especially given uncertainty over access to Horizon Europe funding.
Attracting inward investment, particularly from the private and charitable sectors will be ever more important. Currently investment by overseas owned businesses, for instance, makes up approximately 53 per cent of UK private R&D expenditure. Long-term investment through ARPA must, however, be complemented with a variety of short-term project funding via UKRI, charities and companies.
The UK clearly has world-leading universities and the higher education sector has expanded enormously in the last 20 years. Notwithstanding the current financial difficulties caused by the pandemic and the fragility of university business models so dependent on overseas students, universities in the UK will continue to flourish. They are strong, resilient organisations absolutely critical to innovation and prosperity.
Universities are necessary for the government’s renewed commitment to innovation, but not sufficient. As the government considers how it will allocate funding to departments in its upcoming comprehensive spending review, a strategic overview that considers holistically how best to utilise public and non-profit research organisations to drive innovation and make the UK a true science superpower, will be required.