Skip to content

CaSE reflections on the 2020 Budget

12 Mar 2020

James Tooze takes a look at budget pledges for science and engineering

All I can say is, wow. The start of the last decade in 2010 saw colleagues across the community fighting tooth and nail to retain flat-cash settlements for research, the turn of this decade sees UK research pledged more additional money over the next 5 years than the entire public research budget for 2017. I wrote earlier this week that we expected some announcements on funding increases, but the scale of the announcement was a surprise. The Government has set its envelope for 2020-21 and set a target for 2024-25, but the detail of the how and when is set to be thrashed out during a Spending Review later in the year. Despite this, the budget has outlined some key policies affecting the research and innovation sector that I have broken down.

Uplift and our projections

Prior to the election, the Prime Minister pledged to double public expenditure to £18bn by 2024-25. Welcome indeed, however the costings in the Conservative manifesto published a couple of weeks later were slightly less ambitious. Our previous work, outlining an investment path to reach a research intensity of 2.4% of GDP by 2027, recommended that public spending should reach £18.5bn by 2024-25. The announcements in the budget go even further than our projections, as the Chancellor pledged to increase public research investment to £22bn per year by 2024-25.

Although difficult to predict, the official budget publication concludes that investing £22bn in 2024-25 will be the equivalent of 0.8% of GDP. The Government will be hoping, and expecting, these significant increases facilitate the growth in private R&D investment to help to reach the 2.4% target.

Administration of immediate uplift

The budget outlines measures that will be implemented almost immediately. The first is the pledge to increase investment by £400m in 2020-21 to support world-leading research and fund infrastructure projects to enhance capacity for research excellence right across the UK. Between this commitment, new proposals such as creating a new high-risk, high-reward research funding agency and existing commitments made to the National Productivity Investment Fund made in 2017, public expenditure on research is set to rise by roughly £1.5bn from 2019-20 to 2020-21. Details of exactly how this money will be administered is something we will be keeping a close eye on.

In the wake of the excitement, it is still crucial to consider the balance of how new investments are made. Using the above to make rough calculations, total public investment in R&D will be just under £13bn in 2020-21. The Government’s ambitious target means that £9bn extra, per year, will need to be invested by 2024-25. To put this uplift into context, the entire public investment made in R&D in 2017 was £9.1bn. We are delighted that the Government has given such backing to the UK research base, but how these uplifts are invested will be paramount to turn an input target into desired outcomes for the UK. This may well involve bold new ventures, attempting to recreate the US ARPA for one, but will also require increased and continued support for core UKRI research budgets and QR funding. Uncertainty also remains over the future of the UK’s relationship with EU research programmes, and this significant uplift should allow for any contingencies required to be put into place.

The budget also outlined indirect support measures to support innovative businesses starting almost immediately, an additional £200m of investment in venture capital will be made available, along with increasing R&D tax credit relief from 12% to 13% on April 1.

Science capability across government

One smaller, but equally welcome commitment made in the budget was to provide the Government Chief Scientific Advisor and the Government Office for Science with an additional £2m in 2020-21 to expand cross-cutting science advice in Westminster. The entirety of government will have a role to play in increasing the UK’s research intensity and ensure that the benefits of enhanced research capabilities can be felt by the public. The ability of government departments to be effective customers of research, and understanding how research can support their respective departmental aims, can not only support the research sector but deliver improvements in public services.

More money means more people

While the budget presents great opportunity for the research sector, another policy announcement threatens to undermine the government’s clear mandate for science and engineering. As part of reform to the immigration system, the Chancellor announced that the Immigration Health Surcharge (IHS), a fee that incoming visa holders must pay, will be increased to £624 a year for adults and £470 for children. This fee will be charged to all those coming to the UK in the future immigration system, regardless of the prospective salary the individual will be earning once in the UK. There is no clearly defined policy for employers paying for visa costs and other fees, however most often employers would not cover the IHS or visa costs for family members coming with you. The UK has already been shown to be one of the most expensive countries to enter for a scientist. Given new visa proposals, an individual could expect to earn a salary of £20,480 whilst being required to pay extremely high fees to cover this health charge for themselves and their families. The UK will undoubtedly need people from a wide array of professions to support the government’s endeavour to grow the UK’s research intensity. The recently introduced Global Talent visa is an incredibly welcome one, but researchers using these visa routes should not be prevented from doing simply by the costs of their applications. Along with others in the sector, we will be working to ensure that the future immigration system will not be prohibitively expensive.

Read our formal budget representation

CaSE representation to 2020 Budget