Today saw BEIS publish its internal allocations, showing how it will spend its multi-year R&D budget. CaSE’s Joe Kiely takes a look at the implications of the numbers.
In his 2021 Spending Review, the Chancellor set out the first multi-year R&D budget since 2015. This morning, the Department for Business, Energy and Industrial Strategy (BEIS) has published their plans for allocating this £39.8bn across their portfolio.
With year-on-year increases across many budget lines, today’s allocations take the UK towards the Government’s target of investing £20bn per annum into R&D by 2024-25. At CaSE, we’re pleased to see these targets translated into budget lines, and the three-year settlement supports BEIS and the R&D sector to build longer-term plans around this rising investment.
However, there are strengthening headwinds from the wider economy. Even a UKRI budget rising around 6% per year is likely to be outpaced by inflation, at least in the immediate term. The erosion of buying power will be felt across today’s allocations, making it harder to deliver the scale of transformation desired. As the economic outlook changes, we hope the Chancellor will use upcoming opportunities such as his Spring Statement to protect the Government’s ambitions for R&D from being whittled down.
Looking across today’s allocations, we see three key outcomes:
1. UKRI’s budget moves steadily upwards
UKRI is set to receive over £25bn across this Spending Review period, with the agency’s funding reaching its highest ever level by 2024/25 (£8.9bn). With a steady rate of growth at around 6% per year, UKRI will be well-placed to direct this investment in a sustainable way.
This represents a positive outcome for UKRI, and we now await the details of how these budgets will be divided across its constituent parts. As a reminder, the 2021 Spending Review shifted R&D’s centre of gravity across Whitehall, slowing moving away from BEIS as other Departmental R&D budgets rise proportionally faster (albeit from a much lower base).
Departmental R&D budgets (normalised to 21/22)
2. Door kept open for Horizon Europe association
A £6.8bn multi-year budget for EU collaboration signals the Government’s desire to get Horizon Europe association over the line. Crucially, today’s allocation rolls over unspent budget for Horizon Europe from 2021/22 into the next financial year – significantly easing the path towards association. CaSE and partners across the sector continue to call for the political agreement required for UK participation in Horizon Europe.
In the unfortunate scenario where agreement doesn’t emerge from the tangle of UK-EU political discussions, the Government has at least reaffirmed that this money will be ringfenced for R&D programmes, including those supporting new international partnerships.
3. Lift off for ARIA and a new funding model
Today’s allocations show the new Advanced Research and Invention Agency (ARIA) expanding to its full form over the coming years, as it aims to support high-risk, high-reward research. ARIA will receive £475m during this Spending Review period, supplemented by a further £300m in 2025/26 to bring the total investment to a substantial £800m.