Failing to protect innovation funding risks 'levelling down’

In the Autumn Statement, the chancellor made clear the challenges the country faces. In a strong vote of confidence in UK universities, amongst tough choices, there was a clear commitment to protect funding for research and innovation.

This is a more positive outcome than many were anticipating, and an endorsement of university research, innovation and skills in driving tomorrow’s economy, creating new products and high-skilled, high-paying jobs.

However, issues remain that may hamper universities in supporting levelling up.

First, changes to research and development tax credits could dampen the innovation potential of research-intensive SMEs, which it is well known to play a more important role in local innovation in northern England and the devolved administrations than many parts of southeast England.

Second, and more concerning, there is no response to the risks to many university projects, currently funded through European Regional Development Funds (ERDF).

Universities UK has already warned that over 100 of these local projects are teetering on the brink as funding comes to an end. This is a UK Government ‘blind spot’ which risks undermining levelling up.

Most research and innovation funding from the EU has been supported through framework programmes, the most recent of which is Horizon Europe. Following Brexit, the UK is not automatically entitled to participate in this, and UK association remains out of reach until progress can be made on Northern Ireland protocol discussions.

The UK government has therefore put considerable effort into designing bold new programmes that aim to stimulate international collaboration and attract leading researchers to the UK.

The higher education sector is committed to associating with Horizon Europe but, if that proves impossible, will rally behind the UK alternative.

Yet while the work here is impressive, it makes the lack of planning to support research and innovation projects currently funded through ERDF all the more jarring.

Of the £2.696 billion ERDF funds allocated in England between 2014 and 2023, £556 million were for university led projects. In Wales, 30% of projects were led by universities.

The UK replacement for this funding, the UK Shared Prosperity Fund (UKSPF), sits in the Department for Levelling Up, Housing and Communities – which has no experience in managing research and innovation.

The government has approved spending plans for the UKSPF – but it falls short of what is needed. Wales will receive £772 million less under the UKSPF than it would had the distribution of funds used the same approach as the ERDF, and detail of how much will be allocated to projects that drive local research and innovation across the UK is still missing.

In early 2023, we will see a swath of these projects cut off in their prime. Hundreds of experienced researchers will lose their jobs through what appears to be an oversight, rather than determined policy making.

If levelling up is to mean anything then it is crucial that this work, and the skilled jobs that support it, are protected.

Hundreds of these projects are found across all regions and nations of the UK, and all types of universities, including:

• supporting businesses to create new products and services in Newcastle 
• creating 1,100 jobs in Gloucestershire
• commercialising graphene in Manchester 
• providing bespoke support at no cost to 350 SMEs in Sheffield

Just one example from my own institution, Swansea University, is SPECIFIC, a leading energy technology research and innovation centre funded through the ERDF. This has developed technologies such as printable solar cells and material that stores summer heat to use in winter. Seven companies have been spun out and they work closely with hundreds of businesses and partners.

We are approaching a cliff edge, and in March 2023, 44 jobs are at risk for SPECIFIC alone. We risk losing people that are leading the charge to net zero, and 15 years’ worth of innovations – just when we need them the most.

The transition from EU funding must be supported across all of government.

In the short term, bridging funding will be needed to ensure the UK doesn’t lose hundreds of jobs, huge talent, and local innovation and skills capability. This could involve taking ERDF receipts into account in wider funding allocations, such as formulas used to allocate the recent £100 million for quality-related research and £200 million for research infrastructure.

Without a more joined-up approach, the UK government will inadvertently ‘level down’ rather than level up.

A longer version of this opinion piece was originally published in Wonkhe.