James Tooze takes a look at where increases in public R&D spending are being administered.
Challenge funds and flat-cash cores
01 Mar 2019
In my last blog piece, I discussed the recent Government pledges to increase R&D expenditure in the UK. In this piece, I will set about explaining what pledged uplifts in funding look like from a public investment perspective, using the latest available details that have emerged from fiscal events and allocations documents over the last couple of years. While there is no formula for a ‘perfect’ balance of public funds made available for R&D, it is important to analyse any shifts in the balance of funding and hold Government to account over its choices.
Uplift in public R&D funding – what is it?
The £7bn uplift in R&D funding announced in successive Autumn fiscal events comes from a cross-Governmental pot called the National Productivity Investment Fund (NPIF). Within NPIF are a number of ‘challenge’ funds, such as the Industrial Strategy Challenge Fund (ISCF), the Strategic Priorities Fund and the Strength in Places Fund. Uplifts in QR funding and other smaller funds make up the remainder.
The largest portion of funding has been allocated to the ISCF (I won’t explain too much what that is but if you’re interested read this). The common theme of these challenge funds is that they are designed to help solve problems the central UK Government has identified to be of particular importance in supporting wider Governmental aims. In order to successfully bid for money, research projects must meet a set of criteria to show how their work can help to support the overarching aims of Government. Challenge funds are undoubtedly important in helping to meet the needs of a changing climate, ageing populations and the future of AI. However, the £7bn uplift in R&D funding is being distributed entirely via challenge funds. We can’t say what the ‘right’ balance of funding is in the UK, but it is our job to highlight the changes in the funding landscape.
Do challenge funds affect other areas of UKRI funding?
The truth is that it is almost impossible to know whether expanding challenge funds has a detrimental effect on other UKRI budgets. When I say other budgets, I refer to what many consider to be the ‘core’ budgets of Research Councils, HEFCE (now Research England) and Innovate UK which are now being labelled as ‘Research and Innovation (R&I)’ budgets. These budgets are the bread and butter of excellence-based research grants, postgraduate training and other core research activities. This doesn’t mean these funds have no criteria to meet, but the criteria can be determined by each organisation within UKRI.
From the most recent document allocating research funding, the R&I budget is set to decrease in absolute terms from £4,916m in 2017/18, to £4,862m in 2018/19 and £4,820m in 2019/20. These allocations may change following a Spending Review, but uplifts in challenge funds, alongside broadly flat funding for R&I budgets, means the balance of funding within UKRI is changing.
What can also be tracked is the growth in overall budgets for each constituent of UKRI compared with growth in R&I budgets. As per the allocations documents, overall and R&I budgets are prescribed to each constituent of UKRI by BEIS. The Industrial Strategy pledged to increase UKRI council budgets by 20% in real-terms between 2015/16 and 2019/20. Using allocations documents, we can map how this pledge stacks up.
The data shows that the total overall UKRI council budgets will grow by 16% by 2019/20, but there is a greater variation in the fates of R&I budgets over the same period. What the graph doesn’t show is the size of each council budget in financial terms. The budget size varies between each council, for instance the growth in AHRC budgets is actually smaller in cash terms than increases in the MRC budget. What is clear, is that R&I budgets are not increasing at the same rate as overall budgets of UKRI constituents.
The changing landscape for funding in the UK is now spearheaded by UKRI does cause some difficulties in attempting to quantify any changes to the ‘science and research’ budget, as Innovate UK was not given funding within previous allocations to Research Councils. A huge jump seems to appear in the size of the UKRI budget in it’s first year, when compared to previous ‘science and research’ budgets. In practice however, this is almost entirely down to the reclassification of Innovate UK and who directly funds it. That means that in looking back (to look forward), we have combined some data sources to give the most complete picture that we can.
Of course, research funding does not exclusively come from UKRI. It is crucial that the whole of the funding environment can allow research and innovation to thrive in all of its settings. We do want to ensure that in a new age of challenge funding, R&I budgets are not left out as they have a vital role to play in supporting the excellent research that is carried out in the UK. The diversity of funding streams available to UK research only serve to enhance the breadth and quality of knowledge and must be protected. As this piece is long enough already, I will be covering off funding streams such as QR and departmental R&D budgets in more detail over the next couple of weeks.
* Before 2018, UKRI did not exist as a whole entity. Prior to this date, data was used from the seven Research Councils, HEFCE (now Research England) and Innovate UK, which now come together to form UKRI.
Read CaSE’s representation to HM Treasury for Spring Budget 2024.
DSIT released a series of announcements as it marked its first anniversary on 9th February 2024. Below we take a look at some of these updates.
What does the 2023 Autumn Statement mean for research and innovation?
The Office for National Statistics have published the latest figures for R&D expenditure in the UK here we look at what they mean and project ahead to 2024/25.