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Lifting the lid on how Spending Reviews work

24 Oct 2021

Read our latest piece from Isobel Stephen, Executive Director, Strategy, Performance and Engagement at UKRI

I recently enjoyed engaging with CaSE members in developing UKRI’s five-year Strategy; hearing how we can convene, catalyse and invest in collaboration with others to build a thriving, inclusive research and innovation system; and discussing how our community can help achieve the Government’s ambitions.  Our discussions recognised how important this Spending Review will be which is why we have worked across our community to make a compelling case for investment in research and innovation. 

As I listened to fellow panellist, former Universities and Science Minister, David Willetts share his career-long experience of managing these complex negotiations, it struck me that for many the Spending Review and what follows must be rather opaque. Not just how big Government decisions are made, and by whom, but how these then translate to real-world impacts.

There are of course many ways that Government influences and sets the context for research and development (R&D), from regulation through to tax credits. But at the time of a Spending Review, eyes turn to how it allocates money to departments and the priorities and conditions that Government sets for this.

While the broad-brush strokes should be visible to us on 27 October when the Chancellor delivers his speech to the House of Commons, the implications and details will take time to emerge.

For the first time in a while, we are expecting the Spending Review to offer R&D a multi-year settlement. This should mean public finances have an element of stability and organisations like mine can plan long-term investments with more certainty of future budgets.

But that planning takes time and this blog is an attempt to lift the lid on what happens for UKRI in the run up to a Spending Review and what we expect to happen over the next few months as the details emerge.

Developing the bid

In a Spending Review, all Government departments develop bids, and the evidence to support them, which are submitted to Her Majesty’s Treasury (HMT). This year these were submitted in early September, which made for a busy summer.  HMT then considers the overall envelope for public spending (depending on the overall fiscal position), balances the various bids and advises the Chancellor, the Prime Minister and Cabinet who decide on how to allocate available funding in line with the Government priorities. Parliament is then asked to ratify these decisions. 

As a Non-Departmental Public Body sponsored by the Department for Business, Energy & Industrial Strategy (BEIS) our budgets flow from HMT through BEIS and then to UKRI. As such, UKRI’s funding forms one part of BEIS’ bid to HMT, alongside other BEIS R&D funding such as for the Met Office or for programmes that the National Academies deliver. 

On hearing the first rumours of a Spending Review from Whitehall colleagues, we quickly fired up the UKRI machinery to examine and collate the evidence together from across our Councils and communities to make the best possible case for public investment in R&D.

We’ve worked closely with our community, BEIS and other Government departments to demonstrate how we can help Ministers meet their objectives, including through a broadly based research and innovation system.

Right now, like other public bodies, we wait to see where the complex negotiations and balances across Government will come out, whilst of course making sure we are ready to nudge a bit further in private when opportunities arise. This year has also seen a raft of positive public interventions, such as the Open Letters (Financial Times and The Times) that many of you will have signed.

But we will not begin to find out how successful any of this activity has been until 27 October.

What to expect on Budget Day?

On Budget Day the Chancellor will speak in the House and then publish supporting documents. He will have the difficult job of maintaining public services and delivering on Government promises in a very tricky fiscal environment. The level of detail we discover in October is likely to be limited. We expect that we may soon after know the whole of the Government R&D allocation, BEIS’ overall R&D budget within that, and some of the specific priorities Government is looking to support through this.  Or even this might take a while.  And we certainly do not expect to know UKRI’s budget for some time after that.  However, we are used to that uncertainty and have well-established ways of continuing momentum and impact from our funding into future financial years while these decisions take shape.

How is money allocated to and within UKRI?

The formal answer to this is straightforward: supported by the UKRI executive, the UKRI Board makes a recommendation to the BEIS Secretary of State for the balance of funding across its functions and councils. The Secretary of State considers this advice and decides how to allocate funding to UKRI.

The last round of allocations was made in April 2021 and we published an ‘explainer’ document to give clarity behind the numbers.

How UKRI develops our advice for our Board is critical. This is not a simple exercise. Whatever the scale of UKRI’s settlement from Government we will be making difficult choices, as our collective ambitions will inevitably be in excess of the money we have.  But we start from a position of confidence.  We have listened to the priorities of our community and learned from our experience since UKRI’s inception 3 years ago, and our experience within Councils over decades. Over the next few months, we must develop advice on the balance across the full spectrum of our portfolio to achieve our vision for an outstanding research and innovation system that gives everyone the opportunity to contribute and to benefit, enriching lives locally, nationally and internationally. We must do so in way that ensures we continue to engage deeply and widely with our community in academia, business, charities and beyond.  And that considers our guiding principles to increase diversity, improve connectivity, build resilience and broaden engagement. 

How do the next few months pan out?

So, we are not starting from scratch and we’re not doing this without help. Through our staff, Board members, Council members and advisory structures we have access to an incredible pool of insight and evidence.  Our Strategy development has helped us frame our ambitions, and the Spending Review process has iterated those to better understand Government priorities.

Our conversations have ranged across sectors and disciplines (including round tables, bilateral meetings and through our Councils) hearing wide ranging reflections to shape UKRI’s ambitions and objectives, helping us understand the needs of our communities and those we serve.

Our Board will discuss our allocation choices at their November, January and possibly March meetings, informed by the deliberations at the same time of all our Councils, considering the options and implications for their communities.  We will work closely with BEIS throughout to support the Minister and the Secretary of State in reaching decisions so we can publish our 5-year Strategy early next year and aim to allocate our 3-year funding before or soon after the start of the new financial year.

In the meantime, we will be as transparent as we can be about the choices we face and the timelines we’re working to.  We will also not let this hold back the opportunity to build and leverage strong partnerships and give confidence where we can to sustain momentum. 

My job-share partner Emma and I, and teams across UKRI, look forward to working with even more of you to ensure that whatever funding the Spending Review asks us to invest, we will do so to secure the best possible outcomes for research and innovation in the UK.

Isobel Stephen, Executive Director, Strategy, Performance and Engagement, UKRI – Job-share with Emma Lindsell

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