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UK public investment in R&D rises in 2019

30 Apr 2021

James Tooze takes a look through recent figures on public investment in UK R&D

The yearly publication of statistics on research and development expenditure by the UK Government (formerly known as SET stats) gives us the opportunity to see behind the headlines, and delve into the detail behind changes in the public funding landscape. These statistics are not to be confused with another ONS publication that looks at total R&D funding across all sectors in the UK (Gross expenditure on R&D – GERD). This publication gives a comprehensive look of net expenditure of government departments, UKRI and higher education funding councils, and the publication also includes estimates of expenditure on knowledge transfer activities and the UK’s contribution to EU funding programmes. The statistics show that the public sector invested £13.4bn in SET in 2019, the highest figure recorded in recent history. If you are really interested in the difference between the two publications, you can read more here.

Overall picture of public investment

Recent changes to the funding landscape means that it is more challenging to reflect on historical trends over the past few years. Before 2018, Research Councils were counted separately but Innovate UK was considered to be a part of BEIS’ research investment. Since 2018 and the formation of the UKRI, the Research Councils and Innovate UK investments are displayed as UKRI, and this reclassification led to an apparent drop in BEIS’ investment which makes it difficult to compare these figures from before and after 2018. Similarly, a reassessment by the ONS of Ministry of Defence research activities has led to changes in investment figures in this publication. The ONS review research activities within the Frascati definition of R&D and have decided that £282m of spending in 2019 does not meet the Frascati definition so has been excluded from this year’s publication. Previous year’s figures have not been assessed in the same way, which means comparisons cannot reliably be made.

Of the £13.4bn invested in research, development and knowledge transfer in 2019, £7.7bn was channelled through UKRI. The most significant other contributors to this total were BEIS (£1bn), NHS including NIHR (£1.2bn) and the MoD (£1bn). That means that these four parts of UK government accounted for 82% of total public investment in R&D. While this does not necessarily tell the whole picture, research for all other government departments have been falling and stagnating over the past decade and beyond. DEFRA, which used to have a substantial research budget, has fallen almost fivefold over the last decade, from £241m to £53m. Historical trends do show that the expenditure on R&D by the Department for International Development (DFID), which has since folded into the Foreign and Commonwealth Office, had steadily increased over the last decade. We can perhaps attribute this to research funding through the UK’s commitment to ODA funding but that portfolio has been significantly reduced in the last few months but it will take a few years for those changes to be reflected in the statistics.  

Although all of this £13.4bn is coming from the public purse, this statistical release also shows us how different parts of government have very different priorities when it comes to how they invest in R&D.

The graph shows that the types of research funded by different arms of government vary significantly, and channelling increasingly large proportions of research investment through UKRI means that the variety of opportunities may decrease. CaSE had talked extensively about the importance of departmental budgets for R&D as a way of meeting departments policy aims as well as ensuring a diverse range of funding sources for different types of research.

Destination of public investment

These statistics also give us the opportunity to see where public expenditure on R&D goes. The largest recipient of public R&D expenditure in 2019 was the Higher Education sector, receiving 44% of gross public investment.

Over the last couple of years, there has been a shift towards funding more research activities in Higher Education Institutions and funding research in private enterprise at a lower rate. In 2019, HEIs received £6bn of funding, compared to £5bn in 2017. Meanwhile, public investment in private research decreased by £500m over the same period. The category that is labelled as ‘Within government departments’ includes public expenditure for Research Council institutes, NHS Trusts and Local Authorities, as well as R&D carried out within government. The overseas contribution can primarily be attributed to the UK’s contribution to EU funding programmes, estimates that are provided by HM Treasury.

Expenditure in 2019 gives an insight into the UK Government’s aim to increase research intensity, but these statistics represent the landscape before the pledge to increase public research investment to £22bn by 2024/25. As a Government continues to develop plans through the R&D roadmap and the Innovation Strategy, it is more important than ever to highlight the balances and relationships between different parts of the public sector funding different types of research.