Research funding – where are we now?

Assessing all things Horizon Europe, ODA and more in this comment piece

Following the welcome news over Easter that the UK Government will be providing additional funds to cover the costs of association to Horizon Europe, the beginning of a new financial year gives us the opportunity to reflect on the answers, and remaining questions, about research funding over the next year.

CaSE, along with others in the sector, has been working hard over the past months and weeks to highlight the importance of R&D to the UK economy.  We have highlighted how UK Government funding decisions could lead to cuts in research spending – the exact opposite of the Government’s rhetoric of creating a “science superpower”. Thanks to these efforts we have reached a positive outcome on funding for Horizon Europe and we continue to work hard to highlight the damage cuts in ODA funding and a lack of support for medical research charities are having on the UK research sector.

Horizon Europe

The eleventh hour UK-EU Trade and Cooperation agreement confirmed that the UK would seek to fully associate with the EU’s next research funding programme, Horizon Europe. Despite the programme releasing its first calls over the past couple of months, it was not known how the UK would pay it’s financial contribution towards the programme until the eve of the Easter weekend. The UK Government announced that it was to make an additional £250m available to BEIS to enable the first year’s payment to be made without cutting existing programmes or planned uplifts. Although the UK’s required contribution to Horizon Europe is estimated to be £1bn in 2021/22, availability of existing, unallocated research budgets in addition to the £250m should mean that most of the cost of association is met.

In the 2020 Spending Review, the UK Government announced that BEIS would receive £400m of funding to support ‘government priorities’ and build ‘science capability’. It was confirmed last week that this pot will be used to pay for this year’s Horizon Europe bill. CaSE also understands that £350m was previously set aside in the event that the UK would need to create alternatives to EU funding programmes, and this pot should make up the remainder of the UK’s contribution, bringing the total to £1bn. This means that core research council budgets and existing UKRI commitments should not be affected.

Now, this £1bn estimation for this year’s contribtution is not fixed, and is set to rise over the coming years and these funding announcements should cover the cost of association in this financial year. The Government will need to set out how it will pay for association in future years at the spending review expected later this year. The UK’s financial contribution to Horizon Europe will be based upon the ratio of UK:EU GDP and using this to calculate the percentage of the Horizon Europe cost that the UK is expected to contribute. Currently, UK GDP is equivalent to 18.12% of the EU’s GDP and the current budget for Horizon Europe is sitting at €95.5bn. With the addition of a 2% admin fee and using a fair exchange rate, the estimated cost will be just under £15bn over the 7 year lifetime of Horizon Europe, which translates into an average of just over £2bn a year.

The UK’s bill is estimated to be £1bn this year due to a clause within the UK-EU deal setting out how the payments will be scheduled but this figure is yet to be confirmed. Using these estimates and implementing this clause, it means the UK’s bill for Horizon Europe could reach £3bn p/a in 2026 and 2027. As the UK’s public research investment envelope is set to grow to £22bn in 2024/25, CaSE is asking for graduated and tapering support from HM Treasury to BEIS over the course of the programme, ensuring that continuity of funding for domestic programmes is retained.

As one international partnership is maintained, many others are severely affected

Cuts to Official Development Assistance (ODA) budgets have been handed down to UKRI, severely impacting the UK’s research partnerships with many developing countries, most notably through the Global Challenges Research Fund (GCRF). UKRI has been given £125m in ODA funding by the UK Government for the financial year 2021-22, but has £245m in existing funding commitments. The £120m shortfall means UKRI has to cut ongoing research projects in the UK and developing countries. UKRI has said it can only fund projects until the end of July and that almost 900 projects are affected.

Figures surrounding the overall level of ODA cuts show that R&D elements of the portfolio have been disproportionately affected. UKRI received £422m in ODA in 2020-21, so its budget fell 70% year on year. In comparison, BEIS ODA budget fell by 50% – from £1.4 billion to £706 million – and the overall reduction to ODA is estimated at around 30%.

These cuts not only have a hugely damaging impact to short-term outcomes for research projects but cause immeasurable damage to the long-term ability of the UK to undertake and support life-changing research for people across the world. Funding cuts lead to decreasing capacity of institutions to undertake research which affects the ability to carry out research in the future, alongside the risk of losing hundreds if not thousands of talent research staff. At a time when the UK is seeking to become a ‘science superpower’, acts of cutting research projects midway through their cycle is the exact opposite of a ‘superpower’. By comparison, it was announced last week that new US President Joe Biden intends to bring forward a $325bn R&D package, the largest increase to non-defence R&D in US history.

Medical research charities left in a perilous position

The research charity sector has been severely affected by falls in fundraising revenue as a result of the pandemic. Led by the Association of Medical Research Charities (AMRC), the medical research charity sector has proposed a Life Sciences Charity partnership fund to support research-intensive charities to continue to fund pioneering research. CaSE fully supports the calls for support for the sector. Medical research charities often dominate the endeavours in their specific field of work, for example the British Heart Foundation funds over half of the UK’s independent heart and circulatory-related research.

The AMRC is proposing a co-investment scheme based on a partnership between government and charities that ensures vital medical research charity investment in R&D remains part of the UK’s diverse research base. The fund would be given provision of at least £310m of funding from government in FY21/22 to bridge the projected shortfall in sector spend, with further investments in the FY22/23 and 23/24. This investment would ensure overall sector investment is maintained over this three-year period. This fund would allow charities to continue to support research in universities and industry, as well as continue to build invaluable research partnerships across academia, business and the charities sector.

The pandemic has highlighted the importance of the UK’s strength in life sciences research. Without the UK’s world-leading medical research charities, breakthroughs in treatments for diseases such as cancer, circulatory diseases and diabetes may be lost. This point in time represents an extremely important milestone in support for medical research and without adequate support it is likely that significant amounts of medical research can no longer be funded by these organisations.