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The surrender of the £1.6bn

24 Feb 2023

Earlier this week CaSE revealed that buried deep in an innocuously titled document called ‘Central Government Supply Estimates 2022-23’ was the information that the former Department of Business, Energy and Industrial Strategy (BEIS) had surrendered £1.6bn that was allocated to Horizon Europe and Euratom association back to the Treasury. No explanation has been offered for this by the Government. And if there is a plan to mitigate the impact, it hasn’t been set out. The money has gone back to the Treasury and has not been reallocated to the new Department for Science, Innovation and Technology or R&D activity elsewhere. 

The £1.6bn is over half of the £2.5bn allocated to Horizon Europe association in this financial year and the last. 

This has understandably caused quite the stir in the Research Community. Our Director, Sarah Main, said: “The Government has repeatedly stated that R&D budgets would be protected and that the money allocated for association to Horizon Europe would be spent on R&D. The Government’s reversal of this position with today’s withdrawal of £1.6bn for R&D undermines the Prime Minister’s assertions about the importance of science and innovation to the UK’s future and the creation, only this month, of a new department to pursue this agenda.” 

Since then, there has been a lot of discussion about what this means for investment in R&D and for Horizon association with the Government saying that the surrender of this money will not affect the UK’s ability to associate, if the current impasse with the EU is resolved.  

However, the fundamental point is that this Government (and its predecessors), from the Prime Minister down, have said repeatedly in Parliament and elsewhere that they place great importance on science and innovation and that the money set aside for Horizon Europe association was ring-fenced for R&D.  

When the spending settlement was announced in Autumn 2021 the Department for Business, Energy and Industrial Strategy said in a press release that the settlement: 

“includes full funding for EU programmes, for which £6.8 billion has been allocated to support the UK’s association with Horizon Europe, Euratom Research & Training, and Fusion for Energy. If the UK is unable to associate to Horizon Europe, the funding allocated to Horizon association will go to UK government R&D programmes, including those to support new international partnerships.”

The then Science Minister Nusrat Ghani confirmed this to the Science and Technology Select Committee in October 2022: 

“Chair: […]The previous Chancellor made a commitment that the subscription [for Horizon] was ringfenced and, were it to be the case that we did not associate, it would be used in its entirety to fund what has become known as plan B. Does that commitment still remain?

Ms Ghani: Absolutely. This is the £6.8 billion you are asking me about, Chair. Yes, so it is £6.8 billion, and that was either for the association, which is obviously what we are always hoping for, or the alternative. That is most definitely still the case.”

The Chancellor, Jeremy Hunt, said it would be “a profound mistake” to cut the R&D budget in his autumn statement in November 2022:

“I have heard some speculation that we might cut the research and development budget today, but I believe that that would be a profound mistake … I want to go further, so today I am protecting our entire research budget and confirming that we will increase public funding for R&D to £20 billion by 2024-25 as part of our mission to make the United Kingdom a science superpower.”

In response to a Written Parliamentary Question in November 2022 George Freeman said: 

“At the 2021 Spending Review, the Government committed to funding association to EU R&D programmes, including Horizon Europe and that if the UK is unable to associate to Horizon Europe, the funding allocated to association will go to UK government R&D programmes.”

And in response to another Written Parliamentary Question as recently as this month he also said: 

“If the EU’s delay continues, the Government is ready with a set of alternative programs to deploy funds set aside for Horizon fund to honour the R+D ringfence commitment made by the Chancellor at CSR21 to strengthen UK International R+D.”

This is about Government commitments, and the accountability for those commitments. The Government has made commitments repeatedly over an extended period of time that clearly state that the money set aside for Horizon Europe would be used in full for domestic alternatives if the UK was unable to associate. So what has changed? The Government must explain  how the return of £1.6bn to the Treasury, and not to R&D activity, is in line with their commitments. The Chancellor said that cutting R&D budgets is “a profound mistake” so will he be reallocating that money elsewhere at the upcoming budget? And if not, what actions will be taken to mitigate this loss and put science and engineering at the heart of the UK’s future?