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What have we learned from the summer budget?

08 Jul 2015

A summary of what we already knew, what we found out, and what we still don’t know following the publication of the Government’s Summer Budget

The Chancellor has given his much-anticipated all-Conservative Budget. What can the science and engineering community take away from today’s announcements and what do we still not know?

What we already knew

First, what did we already know before George Osborne stood up at the despatch box today?

  1. The Conservative Party manifesto committed to eliminating the current and capital budget deficit by 2018–19, meaning unprotected departmental spending could be facing cuts of 15% (or £30 billion) over the next three years.
  2. BIS and the Department for Education have already been asked to each find £450 million savings in their 2015-16 budgets (investment in research appears to have been spared but the cut could hit Further and Higher Education in both departments)
  3. The manifesto committed the Government to investing £1.1 billion in science capital each year in real terms up to 2021, more Catapult Centres and University Enterprise Zones, as well as 3 million new apprenticeships.
  4. But they have refused to say what the size of the Science Budget will be or whether the ring-fence will be maintained after 2016. There is also no hint of what might happen to innovation funding, which has doubled in recent years.
  5. Maintenance grants could be converted to loans to help BIS find £1.6 billion of its required £2.2 billion total savings to protect science, according to the FT.

Ahead of today’s budget CaSE submitted a detailed briefing to HM Treasury setting out our priorities for the Summer Budget and this autumn’s Spending Review.

What we learnt today

  1. The Government now aims to eliminate the deficit by 2020, allowing a smoothing out of the “spending roller-coaster”, but this will require a £37 billion further fiscal consolidation over this Parliament, half of which will come from departmental savings and cuts. These will be set out in a Spending Review in the autumn.
  2. A plan to tackle Britain’s low productivity will be published on Friday, which will include investment in transport infrastructure, apprenticeships, and housing. This is being led by economist and new minister, Lord O’Neill.
  3. Maintenance grants will become loans from 2016-17 and tuition fees will be allowed to increase in line with inflation from 2017-18 for “institutions that can show they offer high quality teaching” (this will be consulted on shortly).
  4. All large firms will be asked to pay an apprenticeships levy to create a fund available to companies to support the Government’s aim to create 3 million new apprenticeships. It will be interesting to see how this policy interacts with the proposed skills levy for firms hiring foreign workers currently being considered by the Home Office.
  5. Buried in the Budget document were a few more announcements that didn’t quite make it into the speech: an intriguing “series of science and innovation audits” to support strategic focus in the regions, further proving the “place agenda” is here to stay (p59); more Catapult Centres to be announced shortly (p59); more university collaborations funded through the Research Partnership Innovation Fund, to be announced at the Spending Review (p64); and there will be new Regius Professorships recognising scientific excellence announced to commemorate the Queen’s 90th birthday (p64)

The CaSE response to the budget includes comment from our Acting Director, Naomi Weir, and a full list of announcements for science and engineering.

What we still don’t know

  1. The big elephant in the room is of course the Science Budget and its ring-fence. Will the budget go up or down, will it be ring-fenced and if so will it cover the same things as in the last five years, or will items be moved in and out like in 2010?
  2. We were hoping for more information on the timetable for the Spending Review to be announced but we are still in the dark about that, except that it will be in the autumn and it also appears likely to be a big one.
  3. More catapult centres are to come but we don’t know if Innovate UK will get more funding for them or will have to find the money from within its existing budget (innovation is currently outside the science ring-fence). The Dowling Review praised the Catapult system but said it should only be expanded if more investment is made available.

This was the first budget we can remember when Osborne didn’t mention science at all – despite the focus on productivity – and there were very few investment announcements (partly because so much of the capital budget for the next few years has already been allocated). Nonetheless, we always knew the Spending Review would be the important set piece for the science and engineering community. Hopefully Osborne will have reignited his personal passion for science by then!