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Backing Business R&D

UK business R&D investment has stagnated – the UK Government must build an environment that incentivises businesses to invest in R&D.

21 May 2024

The UK risks falling behind other countries and losing out on the many benefits from investment in research and development (R&D) unless the UK Government creates better incentives for businesses to invest. Investment in R&D could boost the UK economy, improve the quality of the NHS and unleash potential cutting-edge technologies according to a new report, ‘Backing Business R&D’, released today by the Campaign for Science and Engineering (CaSE).

In the UK, businesses are the main funders and performers of R&D; in 2021 they performed 71% of all UK R&D worth £46.9 billion. However, recently released data from the ONS on Business Enterprise Research and Development (BERD) shows that high inflation has contributed to a stagnation in business R&D investment in the UK since 2018.

Today’s report, sponsored by the not-for-profit medical research organisation, LifeArc, sets out some of the most challenging barriers UK businesses face when investing in R&D, and actions the Government should take to overcome them. Recommendations from the report include:

Backing Business R&D

Read the full report

Ensure the policy landscape is predictable and fit for purpose

Clarify tax credits and incentives.

A stable policy environment is vital to enable effective long-term planning and investment by businesses in R&D. For example, recent successive policy changes to R&D tax credits, including the level at which they are set, has led to a lack of clarity and certainty for businesses. The report calls for a statement of intent from the UK Government on the purpose and focus of R&D tax credits to stop this happening in future.

Improve regulation.

The report reinforces existing calls for system-level changes to support innovation and address regulatory uncertainty for new and emerging technologies. It calls for developing standards to drive and guide new technology development and encourages using cross-sector external experts to support regulatory resourcing.

Increase and improve support across different stages of research and innovation

Improve funding and financial support.

Evidence shows that financial support for scale-up businesses is a particular issue. The report recommends using the Mansion House reforms in close collaboration with R&D-led businesses to unlock pension funds for investment in R&D industries, increasing and promoting the number of funding opportunities for SME-university collaborations, and setting long-term budgets for funding bodies.

Support R&D infrastructure.

R&D infrastructure must be part of wider discussions about regional infrastructure and other policy considerations such as planning processes, housing, transport, and utility supply.

Leverage regional strengths in R&D

Support regions and maximise regional R&D capacity.

Regions should be given the freedom to make decisions about local innovation programmes. Our evidence shows that there is plenty of scope to further strengthen local innovation ecosystems to improve R&D investment opportunities, creating opportunities for new jobs and industries across all parts of the UK.

If acted on, the findings and recommendations in this report will strengthen the UK’s R&D community and attract further investment over the coming years.

Commenting on the report:

As a non-partisan organisation with a membership that cuts across R&D sectors, CaSE is uniquely positioned to take this high-level, cross sector view of the UK R&D environment.

The UK Government has made repeated and welcome commitments to invest more public money in R&D. However, now is the time to compliment that intent by building an attractive environment for private investment that allows business R&D to flourish in the UK.

We are hugely grateful to all those who have supported this work, including LifeArc, our expert Advisory Group, CaSE members, and the wider community. All of whom have helped inform our findings.

Dr Alicia Greated
Executive Director, Campaign for Science and Engineering

We want to make life science life changing and our success in doing that, as a nation, depends on whether the fundamentals of our R&D ecosystem are working as they should be. This report shows that action is desperately needed in the UK and we hope that these recommendations will unite the rest of the R&D community to collectively ensure that UK really does become a go-to destination for companies looking to invest in R&D.

Stéphane Maikovsky
Interim CEO at LifeArc

Over the last year we have engaged with experts and professionals from across the business R&D landscape. Our evidence shows that the UK is not as attractive as it could be for business R&D.

To create an attractive environment, all the fundamentals of the R&D system need to be working. The UK Government must use all the levers available to create and enable an environment that incentivises businesses to invest in R&D in the UK.

In this report, we consider actions the Government could take to support the rapid unlocking of barriers to business R&D investment. We also recommend measures that will strengthen the UK business R&D environment in the longer term, building a stable and predictable policy landscape.

Project Lead, Dr Camilla d’Angelo
Policy Manger, Campaign for Science and Engineering


About the project

You can read more about this project of work, and the evidence gathering that has fed into it, on the CaSE website:

About CaSE

The Campaign for Science and Engineering (CaSE) is a charity that works to put science and engineering at the heart of the UK’s future. The UK’s leading advocacy group for science and engineering, our membership spans 110 scientific organisations, including businesses, universities, learned societies and charities, as well as individual scientists and engineers. Collectively our members employ over 336,000 people in the UK, and our industry and charity members invest around £32.2bn a year globally in R&D.

We collaborate with our members, partners and the public to lend our clear, expert voice to decisions about science and engineering. We specialise in developing non-partisan, responsive solutions that help research and innovation to thrive in ways that improve people’s lives and livelihoods.

Charity number: 1147492. Company number: 7807252.

About LifeArc

LifeArc is a self-funded, non-profit medical research organisation. We take science ideas out of the lab and help turn them into medical breakthroughs that can be life-changing for patients. We have been doing this for more than 25 years and our work has resulted in five licensed medicines and a diagnostic for antibiotic resistance.

Our teams are experts in drug and diagnostics discovery, technology transfer, and intellectual property. Our work is in translational science – bridging the gap between academic research and clinical development, providing funding, research and expert knowledge, all with a clear and unwavering commitment to having a positive impact on patient lives.

LifeArc is a charity registered in England and Wales under 1015243 and in Scotland under SC037861.