What’s going on with that Horizon affiliation money?

This week has seen the research policy end of the sector lose its collective mind over the return of £1.6bn of capital originally intended for Horizon affiliation or to fund alternatives from the old Department of Business, Energy, and Industrial Strategy to His Majesty’s Treasury.

The story emerged in a single line on page 300 of the Supplementary Estimates for 2022-23:

xxxv. Surrender of unused funding for Horizon and Euratom association: -£1,602,000,000

It’s one of many equally juicy things on that page – we also see the surrender of £230m in unused funding for science and research, a £547m decrease in science and research funding, and the surrender of £2m from the Advanced Research and Invention Agency (ARIA).

So what on earth is going on?

Colour supplement

You might remember at the back end of last year I introduced you to DEL and AME as I looked at the Department for Education contribution to the national accounts – starting with a fascinating paragraph on the Estimates system as a means of parliamentary scrutiny of government spending.

The Supplementary Estimates happen right at the end of this process, immediately before the end of the current financial year (in this case 2022-23, which ends in March). As the name suggests, Supplementary Estimates amend the Main Estimates (which were published at the start of the financial year, and nominally approved via the Supply and Appropriation (Main Estimates) Act) to more closely reflect the actual spending that took place.

Parliament will approve the Supplementary Estimates via the Supply and Appropriation (Anticipation & Adjustments) Act 2023 – coming soon to the House of Commons.

Where’s the money?

This stuff goes back to the 1689 Bill of Rights, and parliament deciding to approve the expenditure of William III and Mary II on an annual basis – thus setting a parliamentary precedent that (after a series of changes) the House of Commons can only approve government spending one year ahead. As anyone who has ever worked in the Civil Service can tell you, there is no flexibility to carry this authorisation over to the following year.

In practice, the modern era has brought things like multi-year spending reviews, so we know the total amount of money that the government will allocate to a department for a number of years. But the Supply and Appropriation Acts are the mechanism by which each allocation happens.

So – why has the Treasury clawed back all that money that has been allocated for Horizon affiliation? Because it hasn’t been spent during the financial year it was allocated for (although technically it could be spent before the end of next month, we have to admit that this is looking unlikely right now). That’s what the Treasury does. Any resources, capital or cash authorised in the Supply Estimates but not used by the department at the end of a financial year are no longer authorised for use.

If we look at table 2.2 in the 2021 Spending Review document we can see that £1.2bn was allocated to association with EU programmes for 2022-23. We can also see that £1.3bn was allocated for 2021-22, and as we didn’t manage to affiliate that year either this was clawed back. Looking back to the 2021-22 Supplementary Estimates it looks like the funding was clawed back for that year, although some was carried over under the Budget Exchange Scheme – wherein a department surrenders an underspend on the understanding it will get the money back the following year.

Going back to this year’s Supplementary Estimates we can see that the ARIA money was surrendered on this understanding. That note isn’t there for Horizon and Euratom, possibly because although ARIA could start handing out money any day now we are no nearer a decision.

With Horizon affiliation or the money used as an alternative being a spending review commitment the noise we’ve heard over this week is just a taste of the chaos that would ensure should government renege on that. For once, it’s not all this detail we should be watching – it’s the political dressing.