What does the Spending Review 2021 mean for university research and innovation?

The biggest announcement for universities was the government’s plans to invest in research and innovation (R&I) to make the UK a ‘science superpower’ and to support recovery after the Covid-19 pandemic.

The phrase ‘science superpower’ has been used by the government to describe a long-term plan to make sure that the UK is the best place in the world for scientists, researchers and entrepreneurs to live, work and innovate.

The budget also supports the UK government’s ambitions to ‘Build Back Better’ after the pandemic. That is, ‘to support economic growth through significant investment in infrastructure, skills and innovation’. The government’s Innovation Strategy defines innovation as ‘the creation and application of new knowledge to improve the world’.

R&I activities also support ambitions to become a ‘Global Britain’, which essentially means working with international partners and cooperating on global issues that are in the UK’s interests.

Universities play an important role in the post-pandemic recovery to ‘build back better’. They support levelling up and economic growth, help tackle the climate emergency and encourage private investment. 

Universities’ research and innovation activities support businesses, industry, science and academia through the skills, expertise and entrepreneurship of their people. This in turn supports economic growth and tackles challenges in society.

Public funding for research lays the foundation of the UK research and innovation system. It supports the creation of knowledge, develops talent, researchers and innovations and provides national equipment and facilities.

Sustainable funding also creates the conditions for effective collaboration and innovation activities that carry a higher risk. This can lead to transformational breakthroughs – the Covid-19 vaccine being one significant example.

The Treasury invited representations to the Spending Review to help their decision making. In our submission, we argued that universities are critical to achieving the government’s ambitions.

We signed a joint letter to the Chancellor with more than 30 organisations from the wider research community. It urged the government to deliver the commitment made in the 2020 Budget to increase public investment in R&D to £22 billion by 2024−25.

We argued that stop-start investment does not support a sustainable research system. It’s crucial for government to support and invest to meet their ‘science superpower’ commitments. For example, the government’s Research and Development (R&D) People and Culture Strategy predicted that the R&D sector will need at least an additional 150,000 people by 2030 to sustain the UK’s targets.

To support the government’s ambition for a ‘Global Britain’, we also asked for additional and sustainable funding for the UK’s participation in Horizon Europe, recognising the full costs of association over the three-year period. Horizon Europe is the EU’s key funding programme for research and innovation, but reaches well beyond the borders of the EU to 160 countries.

We were very pleased to see the continued commitment to increasing public spending on research, innovation, enterprise and development. The £22 billion target will be met two years later than we asked for, however public R&D investment will still increase to £20 billion by 2024−25.

Spending on R&D, when combined with changes to R&D tax reliefs (reducing taxes based on the R&D activity), will reach 1.1% of Gross Domestic Product (GDP) in 2024−25. GDP measures the total value of all the goods made and services provided during a specific period of time.

The full costs of meeting our Horizon Europe association will also be met. If the UK is unable to associate to Horizon Europe, the funding will go to UK government R&D programmes, including those to support new international partnerships.

We’re working to understand the fuller implications of the budget for universities, beyond research and innovation. But for now we know that the funding we have been promised means universities can continue to support economic growth, lead the transition to net-zero, and produce more transformative breakthroughs. It’s important now that universities continue to demonstrate what they are doing to help the UK reach its ambitions. 

For further information of how research and innovation at universities helps support the UK’s ambitions, you can read our briefing.