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The “Autumn Statement for Growth”

24 Nov 2023

Camilla d'Angelo

What does the Autumn Statement mean for research and innovation?

Dubbed the “Autumn Statement for Growth”, the 2023 Autumn Statement put a spotlight on supporting innovative businesses. The Chancellor set out plans that he says will boost business investment by £20bn a year in the next decade to increase productivity and grow the economy.

The Government also continued to recognise the importance of research and innovation (R&I) to support growth and contribute to an innovative economy. The Chancellor announced a range of measures to support some of the UK’s innovative R&D sectors, including life sciences, digital technology and AI, and clean energy.

Financial support and tax incentives

The Statement announced changes intended to simplify and improve the R&D tax schemes in the UK. This includes a new R&D tax credit scheme, which merges the Research and Development Expenditure Credit (RDEC) and Small and Medium-sized Enterprise (SME) schemes. The Chancellor also announced a new SME-intensive scheme, which lowers the originally proposed threshold for qualifying as R&D intensive from 40% to 30% of total expenditure. This will make an additional 5,000 SMEs eligible for R&D tax relief. While increased flexibility in the tax relief scheme for R&D-intensive SMEs is welcome, it remains to be seen how these changes will impact businesses.

The Chancellor announced further measures to build on and implement the Manion House reforms announced in July which aim to channel more cash from pension funds into high-growth UK businesses. This included a new Growth Fund run by the British Business Bank to give pension funds who don’t have in house expertise the opportunity to access to investments in innovative businesses. The measures announced on pensions are welcome progress towards transforming the investment landscape for innovative companies in the UK.

Read our initial response to the Autumn Statement

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Skills for R&I

The Government committed £50 million to deliver a two-year apprenticeships pilot to increase apprenticeships in engineering and other areas that are held back by skills shortages. Investment in diverse education and skills pathways will be crucial to support a more innovative economy. Therefore, it is welcome to see support for apprenticeships, particularly in the face of declining uptake of STEM apprenticeships. However, to address skills shortages and unlock skills for R&I, we urge the Government to adopt a more coordinated and long-term approach to skills. CaSE’s report The Skills Opportunity calls for a joined-up and integrated skills system to support a more research-intensive UK.

Investment Zones

The Chancellor announced four new Investment Zones, Greater Manchester, West Midlands and East Midlands in England and Wrexham and Flintshire in Wales. In addition, the Chancellor has planned to extend the Investment Zones programme announced in the Spring Budget 2023 from five to 10 years. It is welcome to see the Government’s continued focus on supporting R&I across the UK.

Horizon Europe underspend

CaSE welcomes investments that use some of the Horizon Europe underspend on science and innovation programmes – as the Government has long promised. This includes £250 million for long-term world-class Discovery Fellowships, which will support outstanding mid-career researchers and scientists for up to ten years to pursue ground-breaking discovery-led research in STEM subjects. These will be funded by a Government endowment and awarded by the Royal Society, showing that the Government is thinking creatively about new ways to support science in the long-term. It is also good to see long-term funding made available to mid-career researchers – an area where there have been funding gaps in the past.

Other announced investments include £145 million for new business innovation support, and support to establish a National Academy focussed on mathematical sciences. We look forward to seeing more detail on how the underspend will be distributed.