The future of UK research: structure and funding

DOI: https://doi.org/10.58248/HS48

Overview of Change

The UK is a global leader in research.¹ Research and development (R&D) in the UK is mainly funded by the business sector (55% in 2018).^2,3 Funding from the public sector (including government, UKRI and the devolved higher education funding councils) represented 26% of the total in 2018, while overseas investment the remaining 14%.^2,3 In the 2017 Industrial Strategy, the UK Government set a target of spending 2.4% of GDP on R&D by 2027 (through both public and private investments) and committed to increase this to 3% in the longer-term.^4,5 The latest government strategies set out the opportunities for UK research to reach these targets.⁶ However, there is current uncertainty due to the future model of Horizon Europe membership not being clear and repercussions from the COVID-19 pandemic.

Challenges and opportunities

• In past 12 months, the UK Government published a series of major documents setting out its plans to promote R&D and reach the 2.4% target: In the 2020 Budget, the Government committed to invest £22bn p.a. in R&D by 2024/25.⁷It also pledged £800m over the course of this Parliament to the creation of the Advanced Research and Invention Agency (ARIA), a ‘high risk, high reward’ UK funding body similar to the US Defense Advanced Research Projects Agency (DARPA).^7–9 The House of Commons Science and Technology Committee published a report on this topic in February 2021, recommending ARIA to focus on ‘mission-based’ research projects and to serve a specific Department within government.^10–12 A bill to create ARIA was introduced in Parliament in March 2021⁹ and the S&T Committee inquiry has been collecting new evidence in the meantime.¹³
• In the November 2020 Spending review the Government announced almost £15 billion funding in 2021/22 for R&D, including funding to support clinical research.¹⁴
• The 2020 R&D Roadmap set out wide-ranging priorities to achieve the 2.4% target.¹⁵ These aim to: 1) increase research investments (including into infrastructure and institutions), 2) strengthen the interactions between research at different stages (from discovery to deployment), 3) focus on the R&D workforce, 4) offer funding to promote international collaborations, and 5) level up R&D across the UK.¹⁵ A public survey of almost 400 stakeholders across academia, industry, the public sector and the third sector identified a series of key themes to consider to meet the Roadmap priorities, including: 1) long-term and sustainable funding; 2) greater support for collaboration and knowledge exchange across different R&D stakeholders, at national and international levels; 3) a strategic and long-term approach for R&D in the UK; 4) an improved research and innovation culture, promoting greater diversity in R&D and increasing the attractiveness of R&D careers; and 5) continued support for education, training and skills.¹⁶
• In the 2021 Budget, together with the accompanying ‘Building back better’, the Government set out a series of incentives to promote R&D in the UK.^17,18 These include plans to boost private sector investments, such as £375 million to support business scale up, and a review of the R&D tax relief.¹⁹ In Building back better, the Government also announced plans to publish a new innovation strategy in the summer.²⁰ Criticism of the budget allocations included the lack of support for research charities, uncertainty about funding to support collaboration with EU research programmes and a lack of clarity on costs of the new visa systems to incentivise high-skilled migration to the UK.^21,22 In addition, following the decision to cut Official Development Assistance (ODA) funding from 0.7 to 0.5% of the Gross National Income (GNI) and an overall reduction in GNI due to COVID-19, UKRI is facing a £120m shortfall in funding allocations, which will affect established international programmes such as the Global Challenges Research Fund (GCRF) and the Newton Fund.^23–26
• In the Integrated Review of Security, Defence, Development and Foreign Policy, the Government reiterated its commitment its commitment to R&D and to improve its own science and technology capabilities.²⁷

A series of challenges for the R&D landscape also emerged following the UK withdrawal from the EU. After initial uncertainty about the UK’s access to EU research funding and opportunities to collaborate on multinational research projects,^28,29 the UK-EU Trade and Cooperation Agreement laid the necessary groundwork for continued UK participation in some EU programmes, including most aspects of Horizon Europe, the world’s largest multilateral research funding programme.^30–33 Aligned regulations and free data sharing are key aspects of international collaborations. In February 2021 the European Commission drafted its data adequacy decisions, recognising the UK’s data protection standards as adequate to allow data sharing between the UK and the EU.^34–36 However, the draft still needs to be presented to the EU member states and formally approved.^36,37 If not, this could have significant impact on multinational research projects. There are also some concerns around the alignment of regulations, including those concerning future international clinical trials and medicines.^38,39

To attract overseas researchers to the UK, changes to the immigration system have been announced. These include the introduction of the Global Talent Visa (a new visa system to provide top scientists with fast-tracked entry into the UK with effect from February 2020), a points-based visa introduced from January 2021 and an elite points-based visa to promote high-skilled migration, to be introduced in March 2022.^17,18,40,41 Concerns about visa costs, together with payment of the Immigration Health Surcharge for people planning to stay for more than 6 months, have been raised and it is not clear what impact this will have on overseas researchers’ willingness to come to or stay in the UK.^41–44 Migration from the EU declined between 2016 and 2018, but has started to stabilise since 2018.⁴⁵

Key unknowns

The long-term economic impact of COVID-19 on future research allocations is unknown. In terms of EU-UK collaborations, it is unclear whether UK participation will continue in the same capacity or new policies are needed to restructure frameworks allowing international collaborations. Other unknowns include whether the cost of joining Horizon Europe will come from existing R&D budget allocations (such as UKRI funding) or from additional spending, whether the £800m pledged for ARIA will be subtracted from UKRI budget allocations, and the effects of UKRI budget reduction on international projects. The Government’s 2021/22 R&D allocations will be published in due course. ⁴⁶

Key questions for Parliament

• Are the new strategies in place (including the creation of ARIA) sufficient to meet the UK Government’s goal to spend 2.4% of GDP on R&D by 2027?
• Are the UK’s R&D capabilities sufficient to respond to COVID-19 and to any lessons learnt for managing future risks?
• How the international role of UK’s R&D will be affected following reductions in UKRI funding.
• What will be the impact of UK withdrawal from the EU on the UK science base?
• How the Horizon Europe costs will be met? Will it all come from previously announced R&D funding?

Likelihood and impact

High impact/likelihood, impacts being felt now.