CaSE had questions we wanted to get to the bottom of: How do these forecast departmental shares of the civil R&D budget compare to previous trajectories? and what conclusions can we draw from the nuanced picture of Ministry of Defence (MoD) R&D budgets?
In this analysis piece, we draw together and interpret the data available to address these questions, including highlighting caveats raised by differences between data sources.
The overall picture
The Chancellor announced that over the SR period, 2026/27 to 2029/30, investment in R&D will be £86 billion overall, rising from £20.4 billion in 2025/26 to £22.6 billion in 2029/30 in cash terms. These figures indicate the actual cash investment amount allocated by Treasury for each year; they are not adjusted for inflation. Below we compare the trajectories of public R&D investment levels in cash terms (dashed line) with what these represent in real terms for 2025 (solid line), adjusting for inflation – recorded or forecast – each year.
While this included welcome cash increases to the R&D budget for the Department of Science, Innovation and Technology (DSIT), similarly to previous years, around a third of the overall R&D budget will be spent by other government departments each year. With this significant portion of the R&D budget being allocated outside of DSIT, and the UKRI budget that sits within DSIT, it is important to monitor where this investment is going and, ideally, how it is being spent.
R&D investment by the MoD, for example, represents an important – and increasingly focused on – aspect of the public R&D investment landscape. However, due to changes in how R&D expenditure levels are described for the MoD, monitoring trends is not straightforward. We will therefore explore the trends in defence spending separately, and first focus on other departmental R&D allocations.
A note on the data
In this analysis we are looking at the Capital Department Expenditure Limits (CDEL) for R&D in different government departments. These are the numbers announced in the Government’s Spending Review, and they represent the maximum amount of capital expenditure a department can make on R&D each year. The figures do not cover day-to-day resources and administration costs of departments.
The UK Government does not have a single collection of data we can draw from for R&D CDEL allocations by department, so we have used a variety of sources in our analysis. For the years 2019/20-2023/24 we have used a statistical release published by the Government in February of this year. This data release reports each departments annual outturn on R&D (the actual amount the department spent on R&D that year). For the years 2024/25–2025/26 we have used data submitted by the Chief Secretary to the Treasury in response to a pair of parliamentary questions. For future years we have used the allocations announced in the Government’s 2025 Spending Review.
Each of these sources presents slightly different data, adding caveats to direct comparisons. Some departments included in the data for 2019/20-2023/24 are not included in the 2024/25-2025/26 data and vice versa. Only five departments have had their R&D allocations announced for the forthcoming SR period, with the rest included in a single total number.
Civil R&D
Civil departments refer to all government departments except the MoD. Investment has seen a steady increase since 2019, reaching an approximate plateau in 2025 that will continue through to 2029.
Government-funded R&D in civil departments follows a similar trajectory to the overall picture which includes the MoD. The graph below illustrates how this breaks down on a departmental level and gives a rough picture of how different areas of research are prioritised in government spending. Several trends are immediately apparent in the historic data and the Government’s announced plans.
The Department for Science, Innovation and Technology (DSIT) and the Department of Health and Social Care (DHSC)
The shares of both DSIT and the Department of Health and Social Care (DHSC) decreased between 2019 and 2024 because, despite seeing an increase in their R&D budgets, allocations grew at a faster pace in other departments. The picture changes as we enter the current SR period. DSIT sees a moderate increase in its share of civil R&D while DHSC continues to decline. This is reflected in the more generous R&D allocation DSIT has received compared to DHSC’s, which is roughly flat in cash terms and decreasing in real terms.
The Department for Energy Security and Net Zero (DESNZ) and the Department for Business and Trade (DBT)
The remaining civil departments with R&D budgets announced for the SR period are the Department for Energy Security and Net Zero (DESNZ) and the Department for Business and Trade (DBT). Both departments have seen large cash increases in their R&D allocations since 2019, reflected in an increasing share of the civil R&D budget. DESNZ’s share is currently declining after significant growth between 2021-2024, however it is due to steadily increase over the SR period.
Similarly, DBT will increase its share of the civil R&D budget due to a modest real terms increase over the SR period. It is worth noting that both DESNZ and DBT, along with DSIT, only came into existence in 2023 following the reshuffle of the former Department for Business, Energy and Industrial Strategy (BEIS) and the digital elements of the Department for Digital, Culture, Media and Sport (DCMS). R&D allocation data before this date has been attributed to the most appropriate current department but should be interpreted with this caveat in mind.
R&D outside these departments doesn’t show as clear a trend due to its many different components. There is a noticeable dip roughly coinciding with the COVID-19 pandemic. There is also a steady decline over the SR period.
While we don’t have the R&D allocations for other departments over the SR period, we can look at trends in the historic data.
The Department for Environment, Food and Rural Affairs (DEFRA), the Department for Transport (DfT), and the Foreign, Commonwealth and Development Office (FCDO)
The Department for Environment, Food and Rural Affairs (DEFRA) had the highest proportional growth in its R&D allocation of any department since 2019, with a steady increase over the entire period. The Department for Transport (DfT) has also seen a noticeable increase in its share of the civil R&D budget, although it saw a decrease in 2025.
The Foreign, Commonwealth and Development Office (FCDO) doesn’t show a strong overall trend in its share of the civil R&D budget. There is a significant increase and decrease in the years 2020 and 2021, likely linked to the merging of the Foreign and Commonwealth Office (FCO) and Department for International Development (DfID) in 2020 and cuts to Overseas Development Assistance (ODA) funded research.
Overall civil department picture
Taking a step back, the announced changes in the Spending Review show some continuity with historic trajectories and some differences. Prior to the Spending Review we saw the share of civil R&D being performed by DSIT and DHSC decreasing as other less R&D-intensive departments (notably DESNZ, DBT and DEFRA) increased their allocations at a faster rate. Over the coming SR period DHSC’s share is due to continue decreasing and DSIT’s to hold roughly steady, while DESNZ and DBT continue to grow.
While the civil R&D budget is due to reach its highest real terms value by the end of the SR period, growth in the budget is significantly slower than in 2019-2024, with real terms R&D funding cuts projected for DHSC and other departments.
Defence R&D
The picture for R&D expenditure by the MoD is more complex.
In the graph below, we have plotted the MoD’s annual R&D outturn (the final amount of expenditure on R&D that year) for all years that data is available, at time of publication. We also include an MoD estimate for outturn on R&D for 2024-25, reported in a 2024 MoD memorandum, in grey. For 2024 onwards, we show the R&D expenditure limits allocated for the MoD by Treasury. When taken in isolation, the expenditure limits reported for recent years (2024-2025; dark blue) appear to show a sharp decrease, compared to the actual expenditure on R&D reported by Treasury for the prior year (2023; black).
However, from conversations, CaSE understands that the MoD’s ringfenced R&D expenditure allocations for 2024-2029 represent a ‘floor’ for R&D spending rather than a ‘ceiling’, with additional spending on R&D largely coming from the MoD’s equipment procurement budget (a separate budget line within MoD that is not R&D specific).
Both the language in the SR 2020 and the estimates for R&D expenditure in 2024-25, set out in a 2024 MoD memorandum, suggest that annual R&D expenditure by the MoD is expected to exceed the baseline values allocated by Treasury.
The SR 2020 announcement referred to “an investment of at least £6.6 billion in R&D” for research within MoD, over the four-year spending period (2021-22 to 2024-25). Based on the MoD memorandum’s estimate of an R&D expenditure of £3.03 billion for 2024-25, this £6.6 billion figure is set to be substantially exceeded once the MoD’s R&D final outturn for 2024-25 is reported (currently estimated to reach £9.6 billion across the four years).
The following statement from the SR 2025 supports CaSE’s understanding that this surplus spending on R&D stems from the MoD’s equipment procurement budget:
“Defence spending will be weighted towards capital and will prioritise R&D and innovation… MOD will spend at least 10% of its equipment procurement budget on novel technologies such as uncrewed, autonomous and AI-enabled capabilities”
The impact of this on the overall totals for R&D expenditure across Government is not clear. We would expect the total levels of R&D expenditure reported by the Treasury and the ONS to exceed the headline R&D budget announcements for each year, due to this additional MoD spending.
However, this does not appear to be the case thus far, with ONS figures for total Government expenditure on R&D (GovERD) in recent years falling short of the amounts promised. In 2023, £17.4 billion was invested, significantly lower than the £19.4 billion that was allocated for R&D at the 2021 Spending Review. This shortfall is mainly due to delays in the UK reassociating with Horizon Europe and Euratom, which led to BEIS surrendering £1.6 bn of allocated funds back to the Treasury in 2023. Any additional R&D expenditure from MoD’s budget in 2023 may have reduced but not made up this difference.
Regardless, the discrepancies in the reporting of MoD R&D expenditure limits versus ultimate expenditure mean that comparing future commitments to historic trends in MoD R&D investment is not currently possible. CaSE will be continuing to monitor R&D investment by the MoD in the coming years, noting how this compares to the defence R&D expenditure plans set by the Treasury.
What’s next?
CaSE welcomes the Government’s publishing of historic data on R&D outturn as a breakdown across all departments. This granular data allows longitudinal trends to be assessed, and is especially useful in light of the departmental restructuring that occurred in 2023. We encourage the UK Government to publish a full breakdown of the R&D expenditure allocations across all departments for 2025-2029 SR period, as they did for 2019-2024, to allow long term trends to be monitored.
As has always been the case, there is little transparency as to what the ring-fenced R&D budget is spent on across most government departments. With the launch of the Missions Accelerator Programme (formerly R&D Missions Programme) and as science Minister, Lord Patrick Vallance, set out to the Lords S&T committee, ensuring that R&D investment across all government departments is accountable and working towards the Government’s objectives is crucial. Clear publication of how this targeted R&D investment is being spent across departments will be important in enabling appropriate scrutiny of how R&D expenditure is delivering progress against the Government’s missions and Industrial Strategy.
CaSE wants to see clearer publication of both R&D allocations and ultimate expenditure amounts across all departments to allow accurate scrutiny of the levels and balance of public R&D investment across government.
Related resources
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