Let’s start with the very good news.
Although science ministers George Freeman and Nus Ghani said research funding would not be cut and former Chancellor Kwasi Kwarteng said research funding would not be cut, there was always a worry that R&D might fall victim to a new wave of austerity. Happily, Jeremy Hunt confirmed today that public funding to R&D would increase to £20bn in 2024-25, as promised. This was not inevitable and while the economic case for R&D has been made repeatedly it is reassuring to see the Chancellor reflect this sentiment in his speech yesterday. This is no small increase in funding and as the Chancellor pointed out it is a cash increase of around a third compared to 2021-22.
Elsewhere in yesterday’s Autumn Statement there has been some changes to R&D tax credits. It is a technical change but in short the amount of tax relief a small business can claim has gone down, and relief rate for the Research and Development Expenditure Credit (RDEC) has gone up. RDEC is a more general relief which will allow businesses, including small businesses, to claim 20 per cent relief on their R&D activity. The idea behind these changes are that they will reduce fraud and more effectively target relief at where it has the biggest impact. The R&D tax relief scheme is still complex and riddled with inconsistencies; it’s therefore encouraging to see a consultation on a single scheme on the way.
Thinking of universities and their partners it’s likely that larger businesses will benefit from this relief reform but smaller businesses undertaking innovation activity will lose out. As I’ve argued previously a simpler scheme should allow better incentives including increasing reliefs for companies undertaking innovation in the field of sustainability, and those partnering with universities. The upcoming consultation is the opportunity to make the case for these reforms.
Catapulting toward the future
Elsewhere, there is a 35 per cent funding increase for the UK’s nine Catapults. For those unfamiliar with the Catapult Network these are organisations established by Innovate UK who work to accelerate research into products and services. For example, the High Value Manufacturing Catapult works with companies and universities to commercialise innovation in manufacturing. This investment is interesting itself but with an eye on the forthcoming Nurse Review this could be a hint that the review will come out strongly in favour of Catapults as the cornerstone of the future of the research landscape.
In isolation, the news on research is promising. To have a Chancellor who has recognised the importance of research is also encouraging. Of course, this news can’t be taken in isolation from the fact that investment in innovation tends to decrease during a recession which the UK is now in. The task for universities is not only to take advantage of this moment but to demonstrate how their work can have a material impact on the health, wealth, and livelihoods of people across the UK.