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Fall in UK Government R&D spending in 2021

04 Apr 2023

The figures show that total Government spending on R&D decreased by £803 million, from £15.3bn in 2020 to £14.5bn in 2021

According to the ONS this represents a drop of 5.3%. This figure includes indicative EU R&D budget contributions, an estimate of the proportion of the UK’s EU budget contributions allocated to R&D programmes. When these contributions are excluded, the UK Government’s R&D spending was broadly flat at £14bn in 2020 and 2021, after steady increases from 2016.

As the UK has now left the EU it would be expected that the indicative EU budget figures decrease as those remaining Horizon 2020 projects come to an end. However, they are not being replaced with other R&D expenditure because the UK has not yet associated with Horizon Europe or implemented alternatives, and so this money is not being replaced in UK Government expenditure on R&D. This really highlights the importance, therefore, that the Government finalise an agreement on UK association with the EU Commission to unlock the additional investment promised, which will continue the upwards trajectory necessary to meet the Government’s ambitious targets.

The biggest contributor to UK Government spending on R&D in 2021 was UK Research and Innovation (UKRI). UKRI spent £5.5 billion in 2021, a drop from £5.9bn in 2020, but still higher than the 2019 figure of £5bn. The big increase in spending in 2020 followed by a drop in 2021 is likely to reflect a mix of factors. UKRI has highlighted increases in spending in 2020 as a result of additional funding support for COVID-19 projects. In 2021, we also saw cuts to Official Development Assistance (ODA) spending by £256 million, as a result of the UK Government’s decision to cut the UK aid budget.

The decrease in civil R&D spend in 2021 from 2020 is offset by an increase in defence R&D spending of £768 million. This results from the 2020 Spending Review, which created a £6.6 billion ringfence for R&D spending over four years (from financial years ending 2022 to 2025). This takes defence R&D spending back to levels similar to 2014-18.

The UK Government has committed to increase R&D spending to £20bn by 2024/25. These statistics show that there is work to be done to maintain the upward trajectory to ensure the Government reaches this ambitious goal.