Naomi Weir sets out what we might expect for science next week including the Autumn Budget and industrial strategy white paper
A year on from the Prime Minister’s announcement of £4.7bn additional R&D funding, we have another busy week for science policy lovers. We’re expecting the publication of the Industrial Strategy white paper, followed by the business R&D figures and then the Budget on Wednesday. If that wasn’t enough for you, make sure to book your spot at the CaSE Annual Lecture on Thursday evening given by Hilary Benn on ‘Britain’s place in the world’ – I’m sure there’ll be plenty to chat about over a glass of wine afterwards! But there’s a lot to do before then. So what will CaSE be looking out for next week?
Monday (?) : Industrial Strategy
First up, we expect the publication of the Government’s long-awaited Industrial Strategy in the form of a white paper - assuming it is finalised by then. Since July 2016 when Theresa May became Prime Minister and swiftly replaced BIS with BEIS, a new government industrial strategy has been due. A first draft in the form of a green paper, entitled Building our Industrial Strategy and based around 10 pillars, was followed by a broad consultation which attracted thousands of responses, including one from CaSE, summarised in a previous piece.
We anticipate that next week’s white paper will show that the industrial has been on a diet over the summer months, slimming down from 10 pillars to 5 drivers. Greg Clark gave some indicators of what to expect in a speech this summer. Our understanding is that these 5 drivers (of productivity) will be ideas, business, people, infrastructure and place, with an overarching layer of cross-cutting challenges. The idea is that the broader drivers encompass the elements previously contained in the 10 pillars – for instance ‘business’ might include export, trade and sector deals, and ‘ideas’ contains research and innovation. But we also expect them to include some of the areas identified as gaps during the consultation – such as the inclusion of thinking on the labour market alongside skills in the people chapter. This approach seems broadly sensible as creating a coherent strategy divided up by 10 (or more) pillars would be unwieldly and likely to further promote silos rather than join up across different areas of policy and program delivery.
There will be so much to digest across R&D investment, skills, infrastructure, sector deals, and regional policy to name few. We also know that it won't have all the answers - we're expecting there to be a bit of 'now and not yet', particularly in areas dependent on EU negotiations. That said, some of the areas we’ll be specifically looking out for include:
Is it a proper strategy, with a vision, intended outcomes, clear lines of accountability, and robust ways of monitoring and evaluating if we’re going in the right direction as we go along?
Will the Government set out a concrete plan for combined public-private investment to reach 2.4% of GDP by 2027? As part of this we’re particularly keen to see Government adopt our recommendation for introducing an interim milestone of public investment reaching 0.7% of GDP as part of the industrial strategy. This call has been echoed by the Commons Science and Technology Committee Chair in his letter to the Chancellor and others ahead of the Budget. Regardless of whether they set a firm target or not, it’s completely unrealistic for Government to expect the 2.4% target to be met without further public investment. Particularly at a time when many other factors are competing to make the UK a less attractive place for companies to spend their globally mobile R&D budgets.
Will the Government put sufficient funding and strategic weight behind its plans for technical and vocational skills? This must encompass a realistic plan to recruit and retain teachers, a proper careers advice offer, improvements to the apprenticeship levy, and sufficient funding for schools and FE colleges (where sequential cuts are having serious implications on sustainability let alone growth in provision). And although it is dwarfed other factors so is not top of the list for businesses, we’re curious to see whether the Government sets out how the money collected through the immigration skills charge is due to be used. As yet, no such clarity has been given despite already collecting the money from organisations employing skilled workers through the Tier 2 visa route.
Tuesday : BERD stats out
These should provide an interesting first opportunity to see if/how business investment in R&D has reacted to Brexit. Admittedly businesses tend to make plans for this kind of investment on much longer timeframes, so the effect is unlikely to be dramatic, but it’ll be interesting to see what the numbers are! We’ll be doing a rapid look at the headlines and putting it up on CaSE comment.
Wednesday : Budget day
In the Chancellor’s attempts to streamline Government business and to move to one fiscal event a year, this year we get two budgets (not to mention a bonus election!). CaSE made a short submission to the Treasury ahead of time setting out our Budget priorities, and why they should be priorities for the Chancellor too. In summary we set out that we want to see Government:
- Prioritise R&D investment to boost business confidence in light of Brexit
- Set an interim milestone to increase public investment in R&D to 0.7% of GDP as part of the Government’s 2.4% target
- Be good stewards of public R&D funding, including creating a trusted process for setting spending priorities and increasing QR in line with total increases
The Conservative manifesto commitment for total R&D investment to reach 2.4% of GDP has not yet had its moment in the spotlight at a fiscal event (although it did feature in the Government’s science paper on Brexit) so we’ll be keeping an eye out to see if that makes its way into the Budget, further cementing it as Government policy.
We are expecting to some clarity on the plans for the £4.7bn announced this time last year, although these may be trailed in part over the weekend or in the industrial strategy so could be old news by Wednesday. This may include some details on early sector strategies, such as life sciences, as well as additional major funding competition announcements as part of the industrial strategy challenge fund. We’d expect other Industrial Strategy related funding announcements to also feature – as discussed above. We will be keeping a very close eye on how the additional funding announced by the Prime Minister last year is being used. We have been repeatedly calling for a move away from announcement-friendly ad hoc pots of funding to a much more transparent, trusted process for informing top level funding priorities. The formation of UKRI could provide a good opportunity to do this, and that is what I hope happens.
The UK is also in the extraordinary position of being an extremely efficient funder of research. This suggests that something that we’ve been doing is working. I therefore hope that additional funding is channelled through some of the tried and tested routes, including QR and response-mode grant funding. Pots such as these act as a de-risking strategy for the national innovation ecosystem and must be increased in line with funding increases elsewhere in UKRI. Not to mention that failing to do so would imbalance the balanced-funding principle before its even a year old!
The Government will also need to use the levers within its gift to grow productive private investment in research and innovation. To that end, the outcome of the Patient Capital review is expected so we’ll be keeping an eye out for mention of a National Innovation Fund, and the possible announcement of new rules for investment schemes to incentivise investment in knowledge intensive companies.
On the subject of Brexit, we’ll also be keeping an eye on whether there are any further announcements in relation to H2020 underwriting, structural fund replacements, and proposals for a new international strategy for research and innovation.