BEIS budget increase masks pressures on R&D spending

We review BEIS’ R&D budget for 2021/22

Today saw the release of BEIS’ R&D budget allocations for this financial year, despite the financial year starting in April. Although the release of these budgets is almost two months overdue, we can now see that while the overall envelope rose from last year there are a number of questions that remain. We will attempt to outline some of the most important issues that this year’s budgets have uncovered.

What about BEIS’ overall budget?

The overall BEIS R&D budget for this year is £11.4bn, an increase of £1.1bn from the last financial year. This increase, however, is smaller that the total provision for the UK’s association with Horizon Europe, a commitment that is roughly £1.3bn this year that was previously not the responsibility of BEIS. It looks likely that the UK’s commitments for Horizon Europe association will be included within BEIS’ R&D budgets from this point onwards, becoming part of the UK Government’s commitment to increase public research investment to £22bn in 2024/25. If the UK is to meet the target for 2.4% of GDP to be spent on R&D, it is incredibly important that this commitment to Horizon Europe is additive to domestic research budgets and not at the expense of domestic funding streams.

The Government’s commitment to reach £22bn of public R&D investment is now only 3 financial years away, with a significant amount of ground to be made up. The Spending Review will be vital to setting the trajectory for this uplift. The UK Government-wide 2021/22 R&D budget of £14.9bn means that the domestic R&D envelope will need to increase by almost 50% in the next three years to meet the ‘cast-iron’ £22bn target. As part of these budgetary increases, the value of supporting a diverse R&D sector must be understood should the UK Government have hopes of making the UK a ‘science superpower’.

UKRI budget decreases by 5% despite core council increases

The allocations from BEIS were accompanied by a detailed release from UKRI giving further granularity to their budgets for the coming year. UKRI’s document has shown that compared to the last financial year, their overall budget has decreased by £400m, roughly 5%. The majority of this decrease can be attributed to the cuts to Official Development Assistance (ODA) funding passed down to BEIS and UKRI, which amounts to a £284m reduction when compared to last year. The allocations of ODA and the effects on the distribution of the remaining ODA funding between councils will affect each research council differently depending on the proportion of their previous budgets that were supported by ODA funding.

Despite this overall decrease, UKRI has been able to provide an increase in excess of inflation to core research and innovation budgets for research councils. Small decreases to infrastructure investment (£1m from last year) and strategic programmes (£15m from last year) make up the rest of the differences between this year’s and last year’s UKRI budgets. In their budget explainer, UKRI have planned for expenditure greater than their current budget limit to mitigate the risks of underspending and to ensure best use of available funding, particularly with a higher number of commitments as a result of the pandemic. Between the seven Research Councils and Research England, they have seen an average increase of 11% to their core research and innovation budgets, although these figures will likely decrease slightly to fit with UKRI’s budgetary constraints.

What else did we learn?

The publication of BEIS’ budgets revealed a small settlement to support early-career researchers who are financially supported by charities. However, the £15m from BEIS complemented by £5m from DHSC is not nearly at the scale required to appropriately support the losses that research charities have experienced through the pandemic. CaSE has fully supported the introduction of a Life Sciences Charity Partnership Fund which could help to protect the vital research supported and undertaken by medical research charities. The settlement announced today represents less than 10% of the losses that the medical research charity sector have suffered over the last year and significantly less than the proposals for the Partnership Fund. Without Government support, much of the cutting edge research supported by charities will be lost. In most cases, medical research charities support research that otherwise would not take place, and the loss of this capability would not only be damaging for UK research but more importantly for patient outcomes and advances in treatments. Once it is lost the capability will like not return, or take many years to rebuild.

It is of vital importance that throughout the Government’s drive to increase the UK’s research intensity, the importance of supporting the breadth of research and innovation are not lost behind the headlines. As we have seen in the past couple of months with cuts to ODA research funding, although equivalent to 0.02% of the UK’s total public research budget, these decisions can have catastrophic consequences for individual research programmes, the UK’s reputation and ultimately outcomes for some of the poorest people across the world. Similarly, losing the UK’s world-leading and cutting-edge medical research charity sector is a significant risk. Science, research and innovation is not a commodity that can be bought and sold but is an ecosystem that needs consistent support in order to grow. This is why it is so important that the UK Government gives the backing to those in the positions to enact genuine and positive change for UK science and engineering.